Slide 1: Analyst Conference Call
Analyst Conference Call - Q4, 2010 Review - Acquisition of Bridgeport Energy & Equity Offering Brian Vaasjo, President & CEO Stuart Lee, SVP & CFO Bryan DeNeve, SVP Commercial Services MARCH 9, 2011 1
Slide 2: Forward-looking information
Forward-looking information Cautionary statement Certain information in this presentation and in responses to questions contains forward-looking information. Actual results could differ materially from conclusions, forecasts or projections in the forward-looking information, and certain material fac
Slide 3: Q4, 2010 Review
Q4, 2010 Review
Slide 4: Corporate updates
Corporate updates Financial results exceeded expectations; strong operating availability Financial results in Q4/10 slightly exceeded management’s expectations, and significantly exceeded Q4/09 • Normalized EPS of $0.26, compared to $0.18 in Q4/09 • 91% average plant availability Developments rema
Slide 5: Q4/10 Operating performance
Q4/10 Operating performance Plant Availability Q4 2010 Alberta commercial plants Outlook Genesee 3 56% 88% Clover Bar Energy Centre Joffre 99% 95% Unit 3 Outage Clover Bar Energy Centre 95% 71% Unplanned outage in Jan/11 due Taylor Coulee Chute 100% 97% to blade damage in high pressure Clover Ba
Slide 6: Review of 2010 corporate priorities
Review of 2010 corporate priorities Priority Performance Operational targets • Plant availability of ≥ 94% 90% due to issues with Clover Bar Unit 2 • Sustaining capex of $60M $56 million Construction / development objectives • CPC’s share of final costs for Keephills 3 project at On track ≤ $955M wi
Slide 7: Financial summary - Q4/10
Financial summary - Q4/10 Normalized EPS of $0.26, up 44% over Q4/09 Realized $64/MWh price for the AB commercial plants and portfolio optimization, $18/MWh higher than the average AB power spot price • Increases in AB power spot prices and price volatility provided opportunities to dispatch the
Slide 8: Financial performance – Q4/10
Financial performance – Q4/10 $M, except earnings (loss) per share Q4/10 Q4/09 % Change Revenues(1) $478 $474 0.8% Gross margin(1,2) $205 $182 13% Operating margin(1,2) $124 $120 3.3% Net income attributable to common ($1) $7 (114%) shareholders Earnings (loss) per share ($0.04) $0.33 (112%) Earning
Slide 9: Hedging AB spot power price exposure
Hedging AB spot power price exposure At the beginning of 2011, the company expected 2011 Alberta power prices to remain near the bottom of the power price cycle followed by a recovery in 2012 Base load generation hedge positions at start of 2011 2011 2012 2013 Hedged positions (% hedged) ~73% ~3
Slide 10: 2011 Financial outlook
2011 Financial outlook Original guidance (Jan/11) Normalized EPS comparable to Company’s original forecast for 2010 normalized EPS of $1.20 • Based on an AB power price forecast of $50/MWh in 2011 Assumed 65% of base load coal generation hedged at an average price of mid-$60/MWh for 2011 (hedge
Slide 11: 2011 Corporate priorities
2011 Corporate priorities Operational targets ≥ 94% CPC capacity-weighted plant availability (one Genesee turnaround planned in 2011) ≤ $40M Maintenance capital (plant maintenance and Genesee mine extension) Development and construction targets ≥ $1.5B Capital committed to acquisitions or developmen
Slide 12: 2011 Corporate priorities (cont’d)
2011 Corporate priorities (cont’d) Financial targets(1,2) ~$1.20 Normalized EPS (comparable to original guidance for 2010) Modestly higher Funds from operations than 2010 Cash flow per share Modest Dividend coverage ratio (based on current dividend improvement level) from 2010 Overall investment per
Slide 13: Acquisition of Bridgeport Energy Facility & Equity Offering
Acquisition of Bridgeport Energy Facility & Equity Offering
Slide 14: Building on corporate strengths
Building on corporate strengths The acquisition fits with our growth strategy by tts Bridgeport Energy a w a sis g e ba Solid platform Natural-gas facility m e for sustainable located in target US 00 iv ,0 re t growth NE market 0 1 cc to y a Financial strength Exceeds IRR target z e t l si ten with
Slide 15: Foundation for networked hub
Foundation for networked hub Bridgeport Energy is a strong fit with our technology and operating focus, which are key elements of our strategy of building networked hubs in our target markets In combination with the recently announced acquisitions of power plants in Tiverton, Rhode Island and Ru
Slide 16: Transaction overview
Transaction overview Agreement with LS Power Equity Advisors, LLC to acquire Bridgeport Energy, LLC, which owns the Bridgeport Energy facility Buyer under the Purchase and Sale Agreement for the transaction is a subsidiary of Capital Power L.P., the legal entity that directly and indirectly hold
Slide 17: Acquisition expectations
Acquisition expectations We expect to exceed our targeted return for merchant assets Acquisition expected to exceed the target of 11% IRR (unlevered, after-tax) for merchant assets We expect near/long-term accretion Expect the acquisition to add an average of $0.03 to EPS per year during the fir
Slide 18: Financing of New England acquisitions
Financing of New England acquisitions Expect to permanently finance the two New England acquisitions • Using a combination of both equity and debt Capital Power has entered into an agreement with a syndicate of underwriters co-led by TD securities Inc. and CIBC World Markets Inc. • Company has a
Slide 19: Bridgeport Energy facility
Bridgeport Energy facility Bridgeport Energy is a 520 MW (nominal capacity) natural-gas combined cycle plant located in Bridgeport, Connecticut • Winter generation capacity of 540 MW • Site has adequate space to develop a peaking facility when market conditions warrant Approximately 12-yr old pl
Slide 20: Bridgeport Energy facility (cont’d)
Bridgeport Energy facility (cont’d) Facility equipped with two Siemens V84.3A gas turbines • Additional output from two heat recovery steam generators and one steam turbine • Gas turbines use the same design to those that Capital Power operates at the Manchief facility in Colorado State (Manchief
Slide 21: Transition Plans
Transition Plans Expect potential savings in operating and maintenance costs • Third party O&M contractor arrangement to continue in the near term • O&M services to be ultimately provided by Capital Power; employees to join CPC • Review and optimize the LTSA with Siemens Power Corporation for gas
Slide 22: Questions?
Questions? Investor Relations (780) 392-5305 (866) 896-4636 (toll-free) investor@capitalpower.com www.capitalpower.com 22
Slide 23: Calculation Q4/10 normalized net income
Appendix Calculation Q4/10 normalized net income CPC interest in CPLP 30.7% CPC interest in CPILP 9.1% = (30.7% x 29.7%) ($M) Q4/10 Net income attributable to common shareholders(1) -$1 Unrealized net loss in fair value of CPLP’s derivative instruments $2 (including natural gas held for trading) $8M
Slide 24: Forward-looking information
Forward-looking information Certain information in this presentation is forward-looking within the meaning of Canadian securities laws as it relates to anticipated financial performance, events or strategies. When used in this context, words such as will, anticipate, believe, plan, intend, target, a
Slide 25: Forward-looking information (cont’d)
Forward-looking information (cont’d) regarding the development of the proposed Halkirk I project as well as scheduled timing of project completion; (xxix) expectations regarding the Company’s strategy, including (a) the Company’s expectation to maintain a stable dividend and an investment-grade cred
Slide 26: Forward-looking information (cont’d)
Forward-looking information (cont’d) Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results and experience to differ materially from the Compan
Slide 27: Non-GAAP Financial Measures
Non-GAAP Financial Measures The Company uses (i) gross margin, (ii) operating margin, (iii) funds from operations, (iv) funds from operations excluding non- controlling interests in CPILP (v) normalized net income attributable to common shareholders, and (vi) normalized earnings per share as financi
Slide 28: Non-GAAP Financial Measures (cont’d)
Non-GAAP Financial Measures (cont’d) Management considers operating margin to be representative of plant performance as it excludes indirect administration expenses which consist of corporate administration and business development expenses. The presentation of the pro forma consolidated information
Slide 29: Non-GAAP Financial Measures (cont’d)
Non-GAAP Financial Measures (cont’d) losses on disposal of assets and on unusual contracts. A reconciliation of net income (loss) attributable to common shareholders to normalized net income attributable to common shareholders, and earnings per share to normalized earnings per share is as follows: (
Slide 30: Non-GAAP Financial Measures (cont’d)
Non-GAAP Financial Measures (cont’d) The $6 million loss relating to the Island Generation acquisition is not reflective of performance in the period as it is a result of how income taxes are imposed on income from a partnership and the impact on the accounting for a bargain purchase gain in a busin