Transalta Corporation · TSX:TA
Transalta — Debt Investor Presentation (February 2015)
20 slides from Transalta's debt investor presentation, February 2015
Slide 1: BMO 2015 Fixed Income Conference
BMO 2015 Fixed Income Conference Todd Stack VP & Treasurer 1
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may contain forward looking statements, including statements regarding the business and anticipated financial performance of TransAlta Corporation in 2014, 2015 and subsequent years. All forward looking statements are based on our beliefs and assumptions
Slide 3: Our Platform
Our Platform • Coal • One of Canada’s largest publicly traded 4,930 MW power generator & marketer with over 100 years of operating experience • Gas • Diversified asset base with 64 facilities 1,447 MW strategically positioned in Canada, Western U.S. and Western Australia • Wind 1,271 MW 1 • Total fl
Slide 4: Strategic Focus – Operational Excellence
Strategic Focus – Operational Excellence • Strong Availability across the fleet • Lower mining, operating & outage costs at Alberta coal • 3-year maintenance agreement with Alstom • Productivity improvements at the plants & mine • Strategic agreements with OEMs in wind and gas resulting in lower OM&
Slide 5: Strategic Focus – Growth and Optionality
Strategic Focus – Growth and Optionality • $4.0 billion in growth since 2009, offsetting reductions in power prices & plant retirements • $650 million in committed long-term contracted growth underway, adding $90 million of EBITDA in 2017 • Potential opportunity to life extend Alberta coal through C
Slide 6: Strategic Focus – Financial Strength and Stability
Strategic Focus – Financial Strength and Stability • $500 million in debt reduction since year-end 2013 • $1.4 billion undrawn credit facility • Investment grade ratings • TransAlta Renewables as a source of equity • 88% hedged in 2015 & 75% contracted through 2020 • Re-contracted 700 MW since 2012,
Slide 7: Hedges Mitigating Impact of Weaker Power Prices
Hedges Mitigating Impact of Weaker Power Prices Total portfolio contractedness Alberta MW • Well hedged through 2015 88% 81% 77% 68% 6,000 • Hedge levels assume normal wind and hydro volatility 5,000 • Positioned for upside from 4,000 mid-term price recovery 3,000 Pacific-Northwest 2,000 • Puget Sou
Slide 8: Environmental strategy
Environmental strategy • Canadian federal regulations amended in 2012 designate useful life of coal plants as 50 years • Weighted average life of TransAlta’s Alberta coal fleet is ~17 years • Flexibility provisions enabling unit substitution and ability to apply years from one closed unit to another
Slide 9: Proven Track Record of Growth
Proven Track Record of Growth Growth & other initiatives undertaken to offset lower power prices at Centralia and plant retirements/sales Capital Invested in Growth $M EBITDA $M $1,200 $650M in Growth & committed $1,000 capital Other Initiatives $800 ~$90M in incremental EBITDA $600 $400 $200 $- 201
Slide 10: Significant Near to Medium-term EBITDA Growth
Significant Near to Medium-term EBITDA Growth Significant EBITDA Increase from Committed Growth and Post Alberta PPA Upside $M $1,800 $1,700 $1,600 $1,500 Upside at $75/MWH $1,400 Upside at $65/MWH $1,300 Upside at $55/MWH $1,200 $1,100 $1,000 $900 $800 2014E 2017E 2018E 2021E Existing Business Aust
Slide 11: Potential Investment Opportunities
Potential Investment Opportunities Gas-fired • Gas-fired well positioned to meet 3,000 MW + of additional generation required in Alberta by 2020 • Sundance 7, low cost option in our portfolio • Saskatchewan and B.C. require additional generation to meet growing loads • Expansion & acquisition opport
Slide 12: Options for Life Extension of Canadian Coal Assets
Options for Life Extension of Canadian Coal Assets • Carbon Capture & Storage has significant potential • Evaluating coal to gas conversions • Flexibility under Federal GHG legislation allows optimization of cash flows across the Alberta coal units Pursuing Options to Transition Coal Assets 12
Slide 13: Recent Accomplishments
Recent Accomplishments • $500 million reduction in net debt since YE 2013 $M Debt Maturity Schedule • Rating agencies have all re- $800 affirmed our investment grade in 2014 • As at Sept 30th, 2014, ~$1.6 $600 billion in liquidity including over $200 million in cash 520 • $500 million USD maturity i
Slide 14: Continued Strong Financial Performance
Continued Strong Financial Performance Results 9 MOS 9 MOS 2013 2012 2011 (in millions $CAD, except where noted) Q3 2014 Q3 2013 Revenues 1,905 1,705 2,292 2,210 2618 Comparable net earnings 22 80 81 117 232 attributable to common shareholders1 Comparable EBITDA1 735 781 1,023 1,015 1044 Funds from
Slide 15: Strengthening the Balance Sheet
Strengthening the Balance Sheet • Deliver FFO / Debt target in 2015 • Financing options / flexibility using TransAlta Renewables and out sources of funding • Ability to meet all obligations including sustaining dividend and investment grade ratings in a low price environment FFO / Debt1 $M Senior De
Slide 16: Funding Growth and Debt Reductions
Funding Growth and Debt Reductions TransAlta will use RNW as an efficient way to fund South Hedland and other growth opportunities at TransAlta Committed Funding Requirements (2015 - 2017) $ millions Low High Debt Reductions $ (300) - $ (500) Committed Growth Capital - South Hedland $ (570) - $ (570
Slide 17: Strategic Flexibility – Leveraging TransAlta Renewables
Strategic Flexibility – Leveraging TransAlta Renewables • Sponsored vehicle to own long-term contracted assets TransAlta Public • Access lower cost funding and enhance returns for contracted assets • Release capital to TransAlta as required 70% • >$3 billion potential drop down 30% inventory • Stron
Slide 18: Significant Inventory of Drop-Down Opportunities
Significant Inventory of Drop-Down Opportunities Alberta Hydro • 13 units, representing 90% of Alberta’s hydro • ~$60 - $120 mm EBITDA • Six power stations with long-term contracts Australia Business • 270 km gas pipeline • ~$100 mm EBITDA growing to ~$200 mm Canadian Gas Fired • ~1,000 MW in Albert
Slide 19: Long-term Upside Potential
Long-term Upside Potential Potential incremental annual • Significant potential upside EBITDA from Alberta PPAfacilities¹ once the Alberta legislated 1,000 PPAs expire • Incremental EBITDA $M Alberta prices have 800 averaged ~$65/MWh since deregulation 600 • AESO estimates that ~$80/MWh is required
Slide 20: Investment Proposition
Investment Proposition • Diversified and highly contracted portfolio • Significant near and long-term EBITDA growth • Well positioned for growth in markets with strong fundamentals • Diversified and low cost portfolio provides greatest optionality to meet Alberta’s future capacity needs • Access to
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