Capstone Infrastructure Corp · TSX:CSE.PR.A
Capstone Infrastructure — Q3 2013 Earnings Presentation
31 slides from Capstone Infrastructure's earnings presentation, Nov 13, 2013
Slide 1: Q3 2013 Results Presentation
VALUE EVERY DAY Q3 2013 Results Presentation November 13, 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 the Corporation based on information currently available to the Corporation. Forward-lo
Slide 3: Q3 2013 Snapshot
Q3 2013 Snapshot Strong overall performance Revenue Adjusted EBITDA1 AFFO1 +6.2% +1.3% +18.2% In $ millions In $ millions In $ millions +7.6% +7.0% -1.0% 1 - "Adjusted EBITDA“ and “Adjusted Funds from Operations” are non-GAAP financial measures and do not have any standardized meaning prescribed by
Slide 4: Q3 Financial Performance
Q3 Financial Performance In millions of Canadian dollars Quarter Ended Sep 30 Variance Nine Months Ended Sep 30 Variance or on a per share basis unless otherwise noted 2013 2012 (%) 2013 2012 % Revenue 91.4 85.0 7.6 279.2 263.0 6.2 Net income 20.7 12.4 66.9 51.2 29.0 76.3 Adjusted EBITDA1,2 26.3 24.
Slide 5: Adjusted EBITDA
Adjusted EBITDA1 Variance in AFFO Drivers of Adjusted EBITDA Variance Q3 Adjusted EBITDA by Business2 ► Higher revenue at Bristol Water & +1.3% power segment overall In $ millions ► Partially offset in Q3 & YTD by increased corporate project +7.0% development Q3 Adjusted EBITDA by Geography2 expense
Slide 6: Adjusted Funds from Operations
Adjusted Funds from Operations1 Drivers of AFFO Variance Q3 AFFO by Business2 Q3 2013 ► Higher Adjusted EBITDA offset by +18.2% higher maintenance expenditures related to Cardinal’s combustion In $ millions inspection ► Higher scheduled debt -1.0% principal repayments Q3 AFFO by Geography2 YTD 2013
Slide 7: Q3 2013 Operational Highlights
Q3 2013 Operational Highlights Growth & Diversification 1 ► Worked during quarter to complete acquisition of Renewable Energy Developers Inc. (ReD) on October 1, 2013 ► Capstone gained: ￚ Net 95 MW of operating wind power facilities in Ontario & Nova Scotia ￚ A net 79 MW pipeline of contracted power
Slide 8: Q3 2013 Operational Highlights
Q3 2013 Operational Highlights Cardinal Re-Contracting 2 ► Continued discussions with Ontario Power Authority with a focus on a long-term contract Maximizing Business Performance POWER 3 ► Power facilities achieved high availabilities & total production slightly above long-term average production BR
Slide 9: Q3 2013 Financial Overview: Revenue
Q3 2013 Financial Overview Revenue Drivers of Revenue Variance +6.2% In $ millions +7.6% ► Higher regulated water rates at Bristol Water ► Higher overall power production ￚ Cardinal & hydro power facilities ￚ Rate increases at Cardinal ￚ Higher power pool prices at Whitecourt ￚ Partially offset by l
Slide 10: Q3 2013 Financial Overview: Expenses
Q3 2013 Financial Overview Expenses Drivers of Expense Variance +5.3% In $ millions ► Higher operations & maintenance costs, & inflationary +5.9% increases for energy, consumables, wages & salaries at Bristol Water ► Increased project development costs, reflecting business development initiatives re
Slide 11: Q3 2013 Financial Review: Expense breakdown
Q3 2013 Financial Review Expense breakdown (in millions of Canadian dollars unless otherwise noted) Quarter Ended Sep 30 Variance Nine Months Ended Sep 30 Variance 2013 2012 (%) 2013 2012 (%) Corporate (2.5) (2.3) 10.9 (7.2) (8.0) (10.4) Power segment (23.8) (24.6) (3.1) (77.0) (75.2) 2.4 Utilities
Slide 12: Q3 2013 Financial Overview: Power production
Q3 2013 Financial Overview Power production Actual Actual Average long-term production (GWh) (1) Type Facility PPA Expiry Q3 2013 Q3 2012 Q1 Q2 Q3 Q4 Annual Gas Cardinal 2014 292.2 300.1 343.4 281.4 302.3 333.3 1,260.4 Wind Erie Shores 2026 30.5 32.5 76.9 53.0 33.5 76.9 240.3 Biomass Whitecourt 2014
Slide 13: Power Segment Performance
Power Segment Performance Quarterly For the quarter ended Sep 30, 2013 (in millions of Canadian dollars Gas Wind Biomass1 Hydro Solar Development Total unless otherwise noted) Power generated (GWh) 292.2 30.5 52.0 41.7 12.2 n/a 428.6 Capacity factor (%) 93.9 13.9 97.4 52.8 27.5 n/a n.m.f Availabilit
Slide 14: Cash Resources
Cash Resources As at Sep 30 As at Dec 31 (in millions of Canadian dollars unless otherwise noted) 2013 2012 Power 20.4 20.9 Utilities- Water 2.4 25.3 Corporate 18.6 3.3 Unrestricted cash & cash equivalents 41.4 49.6 Less: cash with access limitations Power (9.2) (8.4) Utilities – Water1 (2.4) (25.3)
Slide 15: Debt Profile
Debt Profile Capital structure aligned to cash flow profile of businesses Long-Term Debt Maturity Profile In Compliance with all Covenants1 Covenant Sep 30, 2013 Erie Shores Debt DSCR Min 1.20x 1.71x Amherstburg Debt DSCR Min 1.15x 1.34x Hydro Facilities Debt Senior Bonds Min 1.2x 1.87x Subordinated
Slide 16: 2013 Outlook
2013 Outlook1 ►Expect Now expect LowerAdjusted AdjustedEBITDA EBITDAin Contribution 2013 to be ~$120M in 2013 to $130M, compared with $115M to $125M previously, reflecting: ￚ Strong performances from businesses in year to date ￚ Expected contribution from ReD’s operating facilities in Q4 2013 ￚ Part
Slide 17: Priorities for Balance of 2013: Resolution of Cardinal
Priorities for Balance of 2013 Resolution of Cardinal ► Conclude discussions with OPA ► 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 suppor
Slide 18: Priorities for Balance of 2013: Integrating new facilities
Priorities for Balance of 2013 Integrating new facilities & development projects ► Moving development projects forward ► Early-stage work has commenced on Skyway 8 in Ontario & Saint-Philémon in Québec 18
Slide 19: 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 20: 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 Experienced team with strong relationships acro
Slide 21: Appendix
CAPSTONE INFRASTRUCTURE
Slide 22: Power Segment Performance: Year-to-date
Power Segment Performance Year-to-date For the nine months ended Sep 30, 2013 (in millions of Canadian dollars unless Gas Wind Biomass1 Hydro Solar Development Total otherwise noted) Power generated (GWh) 947.6 167.5 148.6 126.1 30.7 n/a 1,420.5 Capacity factor (%) 97.2 25.8 96.4 53.8 23.3 n/a n.m.f
Slide 23: Utilities Segment Performance: Bristol Water
Utilities Segment Performance Bristol Water Quarter Ended Sep 30 Variance Nine Months Ended Sep 30 Variance (in millions of Canadian dollars unless otherwise 2013 20121 (%) 2013 2012 (%) noted) Water supplied (megalitres) 21,820 20,248 7.8 61,753 61,370 0.6 Revenue 50.9 45.6 11.7 142.3 132.8 7.2 Adj
Slide 24: Utilities Segment Performance: Värmevärden
Utilities Segment Performance Värmevärden Quarter Ended Sep 30 Variance Nine Months Ended Sep 30 Variance (in millions of Canadian dollars unless otherwise noted) 2013 2012 (%) 2013 2012 (%) Heat & steam production (GWh) 127 125 1.6 768 726 5.8 Interest income1 0.72 0.67 7.4 2.1 2.7 (20.5) Adjusted
Slide 25: 2013 Outlook: Power
2013 Outlook1 Power Expect Slightly Higher Adjusted EBITDA in 2013 DRIVERS FOR 2013 ‣Contribution from newly acquired operating wind power facilities ‣Stable performance from the balance of the power portfolio consistent with long-term average production subject to variations in wind, water flows &
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 rate starting on April 1, 2013 MITIGATING FACTORS ‣ Capstone will hold a 50% interest in Bristol Wa
Slide 27: 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 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 As at Sep 30, 2013 Asset management plan, which is developed by water utilities in the UK every five years & approved by Ofwat. Common shares outstanding 73,019,434 Annual long-term average production (LTA) Preferred shares outstanding
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