Capstone Infrastructure Corp · TSX:CSE.PR.A
Capstone Infrastructure — Q1 2014 Earnings Presentation
27 slides from Capstone Infrastructure's earnings presentation, May 13, 2014
Slide 1: Building for Tomorrow: Q1 2014 Results Presentation
BUILDING FOR TOMORROW Q1 2014 Results Presentation May 13, 2014
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 the Capstone Infrastructure Corporation (the "Corporation") based on information curren
Slide 3: Q1 2014 Snapshot
Q1 2014 Snapshot Strong overall performance Revenue Adjusted EBITDA1 AFFO1 +21.4% +28.9% +45.7% 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 Fi
Slide 4: Financial Performance
Financial Performance In millions of Canadian dollars or on a per share basis unless Quarter Ended Mar 31 Variance otherwise noted 2014 2013 (%) Revenue 114.4 94.3 21.4 Net income 19.5 15.9 22.6 Adjusted EBITDA1,2 41.7 32.3 28.9 AFFO1,3 19.9 13.6 45.7 AFFO per share 0.207 0.180 14.9 Dividends per sh
Slide 5: Adjusted EBITDA
Adjusted EBITDA1 Variance in AFFO Drivers of Positive Adjusted EBITDA Variance Q1 2014 Adjusted EBITDA by Business2 ► Expanded operating wind power portfolio ► Lower operating costs at Cardinal ► Positive foreign currency exchange impact & higher revenue at Bristol Q1 2014 Adjusted EBITDA by Geograp
Slide 6: Adjusted Funds from Operations
Adjusted Funds from Operations1 Drivers of Positive AFFO Variance Q1 2014 AFFO by Business2 ► Growth in Adjusted EBITDA ► Partially offset by higher debt service & maintenance capex due to expanded power portfolio Q1 2014 AFFO by Geography2 6 1 - Chart illustrates contribution for the businesses and
Slide 7: Certainty for Cardinal
Certainty for Cardinal Positive outcome ► 20-year non-utility generator (NUG) contract with the Ontario Power Authority ► Effective Jan 1, 2015 ► Provides certainty on plant’s future & ability to contribute cash flow post-2014 Serving Ontario’s electricity needs for another 20 years 7
Slide 8: Focused on the Future: Near-term wind projects
Focused on the Future Advancing our near-term wind projects ► 10 MW Skyway 8 project in Ontario & 24 MW Saint- Philémon project in Québec ￚ Both projects expected to achieve commercial operations in 2014 ￚ In April, completed $21.4M financing for Skyway 8 ► 25 MW Goulais project in Ontario received
Slide 9: Focused on the Future: Improving investment quality
Focused on the Future Improving investment quality of company Diversifying, de-risking & re-positioning our portfolio Cash Flow Duration 1 1 – Located in Alberta, the Whitecourt biomass power facility is expected to have the ability to operate as a merchant facility following the expiry of its power
Slide 10: Financial Overview: Revenue
Financial Overview Revenue Drivers of Revenue Variance In $ millions ► 9.4% increase in power production ► Favourable foreign currency translation at Bristol Water ► Revenue growth at Bristol Water arising from higher regulated water rates & increased water consumption 10
Slide 11: Financial Overview: Expenses
Financial Overview Expenses Drivers of Expense Variance +15.0% In $ millions ► Foreign currency translation at Bristol Water ► Higher operating expenses at Bristol Water due to maintenance activities ► Expanded wind power portfolio ► Higher administrative expenses ► Partially offset by lower gas tra
Slide 12: Cash Resources
Cash Resources As at Mar 31 As at Dec 31 (in millions of Canadian dollars unless otherwise noted) 2014 2013 Power 38.5 28.9 Utilities- Water 14.6 9.1 Corporate 14.3 7.7 Unrestricted cash & cash equivalents 67.3 45.8 Less: cash with access limitations Power (18.4) (18.1) Utilities – Water1 (14.6) (9.
Slide 13: Debt Profile
Debt Profile Capital structure aligned to cash flow profile of businesses Long-Term Debt Maturity Profile In Compliance with all Covenants1 Mar 31, Covenant 2014 Amherstburg DSCR Min 1.15x 1.39x Hydros Senior Bonds – DSCR Min 1.2x 1.83x Subordinated bonds - Min 1.05x 3.02x DSCR Erie Shores DSCR Min
Slide 14: 2014 Outlook
2014 Outlook1 ►Expect Expect Lower Adjusted Adjusted EBITDA EBITDA in 2014Contribution to be betweenin$150M 2013 to $160M, reflecting: ￚ Stable performance from power facilities & better than anticipated economics from Cardinal ￚ Better than expected impact of foreign exchange rates at Bristol Water
Slide 15: Priorities in 2014
Priorities in 2014 Advance Development Pipeline ► Focus on completing 10MW Skyway 8 project & 24 MW Saint-Philémon project on time & budget ► Starting construction at Goulais in June Maximize Performance of Existing Businesses ► Preventive & predictive maintenance, planning for capital expenditures
Slide 16: Priorities in 2014: Growth Initiatives
Priorities in 2014 Pursuing Growth Initiatives Organic: ► Complete Bristol Water capital expenditure program for current regulatory period (April 2010 – March 2015) & complete PR 14 price review process for next regulatory period ► Explore tack-on opportunities at Värmevärden ► Build on Capstone Pow
Slide 17: Priorities in 2014: New Investment Opportunities
Priorities in 2014 Pursue Growth Initiatives New Investment Opportunities: Power Utilities P3 Transportation • Traditional • Water • Courts • Roads • Renewable • Gas (transmission & • Hospitals • Rails • District heating & distribution) • Schools • Airports cooling • Electric (transmission • Transpo
Slide 18: Strong Fundamentals
Strong Fundamentals High quality, diversified portfolio that is delivering strong performance Substantial investment in Bristol Water, a perpetual business we expect to generate growing cash flow Solid balance sheet New development pipeline Experienced team with strong relationships across the infra
Slide 19: Appendix
CAPSTONE INFRASTRUCTURE
Slide 20: Power Segment Performance: Seasonality
Power Segment Performance Seasonality Actual Actual Average long-term production (GWh) (1) Type PPA Expiry Q1 2014 Q1 2013 Q1 Q2 Q3 Q4 Annual Gas 2034 327.9 347.3 341.8 281.4 302.3 334.1 1,259.6 Wind(2) 2020 - 2037 143.9 80.8 140.7 105.6 75.4 135.9 457.6 Biomass(2) 2014 50.1 49.4 50.2 45.5 50.3 49.3
Slide 21: Power Segment Performance
Power Segment Performance For the quarter ended Mar 31, 2014 (in millions of Canadian dollars Gas Wind1 Biomass1 Hydro Solar Development Total unless otherwise noted) Power generated (GWh) 327.9 143.9 50.1 29.2 7.7 n/a 558.8 Capacity factor (%) 95.4 35.6 99.9 37.8 17.8 n/a n.m.f. Availability (%) 10
Slide 22: Utilities Segment Performance: Bristol Water
Utilities Segment Performance Bristol Water Quarter Ended Mar 31 Variance (in millions of Canadian dollars unless otherwise noted) 2014 2013 (%) Water supplied (megalitres) 19,638 19,238 2.1 Revenue 56.2 44.1 27.5 Adjusted EBITDA before non-controlling interest 26.9 20.8 29.3 Adjusted EBITDA 13.4 10
Slide 23: Utilities Segment Performance: Värmevärden
Utilities Segment Performance Värmevärden Quarter Ended Mar 31 Variance (in millions of Canadian dollars unless otherwise noted) 2014 2013 (%) Heat production (GWh) 367 432 (15.0) Interest income 0.8 0.7 14.3 Adjusted EBITDA & AFFO1 0.8 0.7 14.3 1 – Värmevärden’s contribution to Capstone’s AFFO cons
Slide 24: 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 25: 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 26: 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 27: Additional Details
Additional Details Glossary Investor Information AMP Quick Facts As at Mar Asset management plan, which is developed by water utilities in the UK 31, 2014 every five years & approved by Ofwat. Common shares outstanding 93,016,357 (TSX:CSE) Annual long-term average production (LTA) An average product
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