Capstone Infrastructure Corp · TSX:CSE.PR.A
Capstone Infrastructure — Investor Presentation (December 2014)
22 slides from Capstone Infrastructure's investor presentation, Dec 19, 2014
Slide 1: Capstone Infrastructure 2015 Outlook
CAPSTONE INFRASTRUCTURE 2015 OUTLOOK December 19, 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: 2015 Outlook
2015 Outlook Adjusted EBITDA1 in 2015 anticipated to be approximately $115 million to $125 million. Assumptions include: Lower contribution from Cardinal as it begins operations as a dispatchable plant under new OPA contract. Bristol Water AMP6 takes effect on April 1, 2015: existing water r
Slide 4: Growth Assumptions 2015-2017
2015 - 2017 Growth Assumptions SIX MEDIUM IMPROVED TERM WIND OUTCOMES FOR BRISTOL WATER PROJECTS WHITECOURT • Settlers Landing • Projected higher AB • Achieve financial • Snowy Ridge power pool prices performance through • Ganaraska • Normalized run-rate major efficiencies and EBITDA of ~$5M capex d
Slide 5: Adj. EBITDA Bridge to 2017 Run Rate
Adj. EBITDA Bridge to 2017 Run Rate 5
Slide 6: AFFO Bridge to 2017 Run Rate
AFFO1 Bridge to 2017 Run Rate Long-Term Targeted Payout Ratio of ~80% 2 2 1. “Adjusted Funds from Operations” is a non-GAAP financial measure and does not have any standardized meaning prescribed by International Financial Reporting Standards (“IFRS”). As a result this measure may not be comparable
Slide 7: Capstone's Development Pipeline
Capstone’s Development Pipeline Operating Assets Run Rate Construction Assets Capacity COD / EBITDA 5 Yr. Avg. Development Assets Stage Capacity Ownership Total Cost CSE Equity Adj. EBITDA (Net) Expected COD (100%) AFFO Skywa y 8 Opera ting 9.5 MW 100% 9.5 MW Q3 '14 $27 mm $7 mm $3 mm $3 mm $1 mm St
Slide 8: Corporate Liquidity Management
Corporate Liquidity Management 1 1 1. As per slide 6, liquidity would be lower by ~$31M without project financing of Cardinal. 8
Slide 9: Corporate Liquidity Management – Excluding Bristol Water
Corporate Liquidity Management – Excluding Bristol Water 1 1 1. As per slide 6, liquidity would be lower by ~$31M without project financing of Cardinal. 9
Slide 10: Bristol Water Update
BRISTOL WATER UPDATE The following observations are those of Capstone Infrastructure. The ultimate decision of whether to accept the UK water regulator’s final determination on the 2015 – 2020 business plan resides with Bristol Water’s Board of Directors, management and its owners. 10
Slide 11: Bristol Water AMP6 Final Determination Summary
Bristol Water AMP6 Final Determination Summary Ofwat set allowable total wholesale expenditure of £409 million 14% higher than Draft Determination of £359 million Average household bill falls to £164 in first year, then to £152 Allowable cost of capital (WACC) of 3.6%; PAYG rate of 55% No
Slide 12: Key Industry Members
Key Industry Members Ofwat is the economic regulator Ofwat’s primary duties are to: • Protect the interests of consumers • Ensure efficient companies are able to finance their functions Ensures the sustainable development of the industry Ofwat decisions may impact on environment, social and ec
Slide 13: Bristol Water Overview
Bristol Water Overview Average SIM Score 11/12-13/14 Average Age of Mains 80 90 80 60 70 40 60 50 20 Source: Ofwat SIM Rankings Source: PR09 Asset Inventory Treatment Complexity – W3/W4 Percentage of Upstream Assets 100% 40% 80% 30% 60% 20% 40% 10% Source: PR09 Asset Inventory 20% 0% Source: June Re
Slide 14: Competitive Customer Rates
Competitive Customer Rates Average Water Charges 2014/15 Source: WaterUK, February 2014 14
Slide 15: Customer Input on Business Plan
Customer Input on Business Plan Customer Support BW presented 4 choices Customers opted for improved service levels with small billing impact Support for BW’s plan was 92% (acceptable or very acceptable) Scenario Impact on bills by 2020 Capex Name A -£12 £205M Managed Decline B £0 £320M Mainta
Slide 16: Keith Harris Independent View of Plan
External Advisors on Business Plan Keith Harris Independent View of Plan Base Totex Enhancement Expenditures Efficiency, Cost of Capital, Financial, Overall Plan Assurance 16
Slide 17: Final Determination Outcome
Final Determination Outcome Industry Bill Decreases 25% Ofwat average bill reduction 4.5% across the industry 20% BW reduced by ~20% compared to current bill 15% 10% Industry Average: 4.5% Bristol Water Base Totex Gap 5% £450 -% £400 £70m £350 Less £300 £250 Industry Range of PAYG Ratios £200 80
Slide 18: Capstone's Key Concerns
Capstone’s Key Concerns THREE MAIN AREAS Totex WACC/Small Company Premium Pricing /PAYG 18
Slide 19: Next Steps
Next Steps Established Process • Companies have until Feb 12, 2015 to decide whether to accept final determinations Ofwat • BW Board of Directors will meet on Feb 5, 2015 • Rejection would require Ofwat to refer to the CMA • CMA panel convenes and reviews submissions CMA from both sides • Final CMA
Slide 20: Capstone's Strong Fundamentals
Capstone’s Strong Fundamentals High quality, diversified portfolio delivering strong performance Investments in perpetual utilities expected to generate growing cash flow Solid balance sheet Project development pipeline and proven execution skills Experienced team with strong relationships across th
Slide 21: 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 22: 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
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