Capstone Infrastructure Corp · TSX:CSE.PR.A
Capstone Infrastructure — Q1 2012 Earnings Presentation
32 slides from Capstone Infrastructure's earnings presentation, May 15, 2012
Slide 1: Q1 2012 Results Presentation
Q1 2012 Results Presentation May 15, 2012
Slide 2: Disclaimer
Disclaimer Certain of the statements contained within this document are forward-looking and reflect Water; the Swedish Krona to Canadian dollar exchange rate; the UK pound sterling to Canadian management’s expectations regarding the future growth, results of operations, performance and dollar exchan
Slide 3: Highlights
Highlights ► Solid Q1 operating & financial performance 1 ► Executing 2012 refinancing plan to address debt maturing in 2012 2 ► Advancing discussions with Ontario Power Authority on Cardinal 3 3
Slide 4: Q1 2012: A much larger, more diversified company
Q1 2012 A much larger, more diversified company Revenue Adjusted EBITDA1 AFFO1,2 +96.4% +101.6% +5.6% In $ millions In $ millions 1 – Excludes internalization costs. In $ millions 2 – Please refer to new definition for AFFO provided on slide 30. 4
Slide 5: Completing our Refinancings
Completing our Refinancings Remaining ~$80M in 2012 debt to be addressed in May ► Bond financing at Värmevärden in 1 February, enabling us to repatriate ~$49.5M ► Sale of 20% interest in Bristol Water to 2 ITOCHU Corporation on May 10th for net proceeds of ~$68M ► Recapitalization of hydro power fac
Slide 6: Bristol Water Sale
Bristol Water Sale Compelling opportunity Organizational Structure Strategic Benefits ► Effectively addresses debt maturities while maximizing future cash flows Capstone I-Environment ► Realize an attractive return on investment Infrastructure Investments ► Retain controlling ownership of Bristol 71
Slide 7: Bristol Water Sale: ITOCHU has 30-year history
Bristol Water Sale ITOCHU has 30-year history in global infrastructure sector Interests 2,700MW in O&M of providers installed to global power water capacity sector Serving water & wastewater facilities Desalination globally since facilities in 1975 & now the Middle building an East international foo
Slide 8: Bristol Water Sale: Means to address refinancing
Bristol Water Sale Compelling means to address refinancing requirements ► High degree of transaction & pricing certainty ► Eliminates need to raise additional debt, which could have included an amortization profile that would limit Capstone’s cash available for dividends ► Creates new balance sheet
Slide 9: Cardinal Re-contracting
Cardinal Re-contracting Improved clarity on range of outcomes ► Continuing dialogue with Ontario Power Authority ► Improved clarity on pricing parameters & range of possible outcomes ► Continue to work towards concluding a new contract ► Remain confident that Cardinal has significant value: ￚ Electr
Slide 10: Dividend Policy
Dividend Policy ► Will make determination following completion of refinancing initiatives ► Intention to establish a dividend based on post-2014 cash flows that will be sustainable over long term with the potential for growth ► Philosophy remains that a majority of the total return delivered by Caps
Slide 11: Capstone Today
Capstone Today Stronger foundation for the future Capstone today is larger & more diversified than Substantially lower risk one year ago & profile in terms of is continuing to portfolio diversification deliver stable operating Broader international performance. reach, which differentiates CSE from p
Slide 12: Q1 2012 Highlights
Q1 2012 Highlights In line with or ahead of expectations 101.6% increase in Adjusted EBITDA excluding internalization costs In millions of Canadian dollars or on a per share basis unless Quarter ended Variance otherwise noted Mar 31 2012 2011 (%) Revenue 92.2 46.9 96.4 Net income 16.2 41.34 (60.8) A
Slide 13: Diversified Portfolio
Diversified Portfolio Q1 2012 Adjusted EBITDA by Country1 Q1 2012 Adjusted EBITDA by Business1 Q1 2012 AFFO by Country1,2 Q1 2012 AFFO by Business1,2 13 12 –– Chart illustrates contribution from the businesses & excludes corporate component. Bristol Water had $nil AFFO in the quarter ended March 31,
Slide 14: Q1 Power Segment Performance
Q1 Power Segment Performance Overview Contribution from Amherstburg plus higher production at Erie Shores & Whitecourt For the quarter ended Mar 31, 2012 (in millions of Canadian dollars Gas Wind Biomass1 Hydro Solar Total unless otherwise noted) Power generated (GWh) 341.9 84.0 53.1 31.6 6.8 517.4
Slide 15: Q1 Power Segment Performance: Production by asset
Q1 Power Segment Performance Production by asset Overall production up 3.8% Power Generation Three Months Ended Variance (GWh) Mar 31 (%) 2012 2011 Cardinal 341.9 341.0 0.3 Erie Shores 84.0 70.6 19.0 Hydro Power Facilities 31.6 35.6 (11.2) Whitecourt 53.1 51.2 3.7 Amherstburg 6.8 - 100.0 Total 517.4
Slide 16: Q1 Utilities Segment Performance
Q1 Utilities Segment Performance Bristol Water Värmevärden For the period ended Mar 31, 2012 For the period ended Mar 31, 2012 (in millions of Canadian dollars unless otherwise noted) (in millions of Canadian dollars unless otherwise noted) Water supplied (megalitres) 19,763 Heat production (GWh) 39
Slide 17: Q1 Expenses
Q1 Expenses Total expenses increased by 76.4%, excluding internalization costs (in millions of Canadian dollars unless otherwise noted) Three Months Ended Mar 31 Variance 2012 2011 (%) Corporate1 2.2 4.1 (47.0) Power segment 26.2 24.8 6.0 Utilities segment – Water2 22.5 - 100.0 Total expenses 50.9 2
Slide 18: Cash Resources
Cash Resources (in millions of Canadian dollars unless otherwise noted) As at Mar 31, Dec 31, 2012 2011 Power 20.9 14.0 Utilities- Water 18.4 35.4 Corporate 5.6 8.2 Unrestricted cash & cash equivalents 45.0 57.6 ► Bristol Water holds an additional $89.5M in short-term investments, which, along with
Slide 19: Debt Profile
Debt Profile Long-Term Debt Profile1 Covenants Mar 31, Covenant 2012 CPC - Cardinal Total Leverage Ratio Max 3.50x 2.79x Interest Coverage Ratio Min 3.50x 5.49x Erie Shores Debt DSCR Min 1.20x 1.84x Amherstburg Debt DSCR Min 1.15x 1.17x Bristol Water Debt Interest Coverage Ratio Min 1.4x 1.5x Net de
Slide 20: 2012 Outlook: Power Portfolio
2012 Outlook Expect stable performance & total Adjusted EBITDA of ~$110M to $120M Power Portfolio Expected to Perform in Line with LTA Production DRIVERS ‣ Steady production across portfolio subject to wind, water flows & sunlight ‣ Full year of contribution from Amherstburg Solar Park MITIGATING FA
Slide 21: 2012 Outlook: Bristol Water
2012 Outlook Expect stable performance & total Adjusted EBITDA of ~$110M to $120M Bristol Water Expected to Deliver $7.5M in Dividends in 2012 DRIVERS ‣ Steady demand with little seasonal variation ‣ Expected to benefit from a ~3.9% real increase & a 5.2% inflationary increase in its regulated reven
Slide 22: 2012 Outlook: Värmevärden
2012 Outlook Expect stable performance & total Adjusted EBITDA of ~$110M to $120M Full Year Contribution from Värmevärden ‣ Leverage in business following the recapitalization ‣ Expect to receive ~$4M in cash flow from this investment in 2012 ￚ Continuing emphasis on operational efficiency ￚ Buildin
Slide 23: 2012 Priorities
2012 Priorities ► Complete refinancings in May to complete renewal of 1 balance sheet & reposition Capstone for growth ► Establish our new dividend in Q2 to provide certainty for 2 shareholders ► Complete new contract for Cardinal 3 23
Slide 24: 2012 Priorities: Cardinal
2012 Priorities Cardinal ► Negotiations continuing ￚ Six meetings since mid-December ► Seeking fair outcome that recognizes Cardinal’s high quality, contribution to the electricity supply mix & its industrial, economic, social & community importance ► Negotiations remain complex, but optimistic we c
Slide 25: Ongoing Priorities: Power businesses
Ongoing Priorities Maximizing performance: power businesses Power Segment ► Maintaining high availability ► Sale of renewable energy credits (RECs) at Whitecourt ￚ Expect more than $450K in revenue in 2012 Consistently High Availability (%) Three Months Ended Variance Mar 31 (%) 2012 2011 Cardinal 9
Slide 26: Ongoing Priorities: Bristol Water
Ongoing Priorities Maximizing performance: Bristol Water Utilities Segment – Bristol Water ► Executing capital projects, which will drive growth in RCV ► Focused on achieving regulatory targets ￚ Leakage of < 51M litres/day in 2012 – 2013 ￚ Top quartile ranking in 2012 on Ofwat’s SIM customer servic
Slide 27: Ongoing Priorities: Re-focus on growth
Ongoing Priorities Re-focus on growth in second half of 2012 Efforts to increase the value of our portfolio should contribute to steady dividends & capital appreciation in years ahead 27
Slide 28: Successfully Addressing our Priorities
Successfully Addressing our Priorities Committed to creating value for shareholders Why Invest in Infrastructure? Consistent demand We are addressing our 2012 priorities & expect to High barriers to re-focus on growth in the second half of 2012 entry with the goal of harnessing the compelling attr
Slide 29: 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 30: Non-GAAP Performance Measures (continued)
Non-GAAP Performance Measures Definitions (continued) Adjusted Funds from Operations (AFFO) During the first quarter, Capstone modified its definition of AFFO in anticipation of the sale of a portion of Bristol Water business and to reflect the substantial amount of cash retained by the Bristol Wate
Slide 31: Assumptions
Assumptions The material factors or assumptions that were applied in formulating the forward-looking statements and the financial outlook contained herein include or relate to the following: that the business and economic conditions affecting the Corporation’s operations will continue substantially
Slide 32: Additional Details
Additional Details Glossary Investor Information AMP Quick Facts Asset management plan, which is developed by water utilities in the UK every five years & approved by Ofwat. Common shares outstanding 71,465,955 Annual long-term average production (LTA) Preferred shares outstanding 3,000,000 An avera
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