Capstone Infrastructure Corp · TSX:CSE.PR.A
Capstone Infrastructure — Q2 2015 Earnings Presentation
25 slides from Capstone Infrastructure's earnings presentation, Aug 11, 2015
Slide 1: Q2 2015 Results Presentation
Essential Q2 2015 Results Presentation August 11, 2015
Slide 2: Notice to Readers
Notice to Readers This document is being distributed on a confidential basis by Capstone Infrastructure Corporation (“Capstone” or the “Corporation”). References to “we” “us”, “our” and similar expressions are to Capstone. This document is an outline of matters for discussion only and no representat
Slide 3: Q2 Accomplishments
Q2 Accomplishments Reached operational milestones on several fronts ► 25-MW Goulais wind project reached COD ► Completed refurbishment at Cardinal and began dispatching power to Ontario grid ► Received final REA necessary for all five Ontario wind projects ► Made progress on the CMA review at Bristo
Slide 4: Q2 2015 Snapshot
Q2 2015 Snapshot Performance In Line with Plan Revenue Adjusted EBITDA1 AFFO1 250 -22.3% -28.2% -76.9% 90 35 80 200 30 70 60 25 In $ millions In $ millions -23.5% -27.2% -92.3% In $ millions 150 50 20 100 40 15 30 10 50 20 10 5 0 0 0 Q2 Q2 YTD YTD Q2 Q2 YTD YTD Q2 Q2 YTD YTD 2014 2015 2014 2015 2014
Slide 5: Q2 Financial Performance
Q2 Financial Performance In millions of Canadian dollars Quarter Ended June 30 Variance Six Months Ended June 30 Variance or on a per share basis unless otherwise noted 2015 2014 (%) 2015 2014 % Revenue 81.4 106.4 (23.5) 171.6 220.8 (22.3) Net income (5.6) 8.4 (166.0) (0.1) 27.9 (100.4) Adjusted EBI
Slide 6: Financial Overview: Revenue
Financial Overview Revenue 250 Drivers of Revenue Variance -22.3% 200 150 -23.5% In $ millions 100 ► New Cardinal contract ► Atypical confluence of circumstances: 50 ► Lower production at power assets ► Impact of AMP6 rates at Bristol Water 0 Q2 2014 Q2 2015 YTD YTD (now under CMA review) 2014 2015
Slide 7: Adjusted EBITDA
Adjusted EBITDA1 Variance in AFFO Drivers of Adjusted EBITDA Variance Q2 2015 Adjusted EBITDA by Business2 ► Factors affecting 90 -28.2% revenue impacted 80 AEBITDA 70 ► Helped by contributions from 60 -27.2% new wind projects: 50 ‒ Skyway 8 40 ‒ Saint- 30 Q2 2015 Adjusted EBITDA by Geography2 Philé
Slide 8: Adjusted Funds from Operations
Adjusted Funds from Operations1 Drivers of AFFO Variance Q2 2015 AFFO by Business2 ► Primarily related to -76.9% lower Adjusted 35 EBITDA factors in the power segment 30 ► Opted to defer 25 dividend from 20 -92.3% Bristol Water ► Pending dividends 15 Q2 2015 AFFO by Geography2 from Saint- 10 Philémo
Slide 9: Steady Organic Growth
Steady Organic Growth Completed near-term wind projects ► Focus on development ► 25 MW Goulais project in Ontario Commissioned in Q2 as expected and under budget ► Renewable Energy Approvals in hand for all five Ontario wind projects ‒ Ganaraska 18 MW ‒ Grey Highlands Clean 18 MW ‒ Grey Highlands ZE
Slide 10: Completed Cardinal Refurbishment
Completed Cardinal Refurbishment Finished on schedule in Q2 ► Cardinal is now operating as a cycling facility ► Began dispatching power to Ontario grid in Q2 ► Dispatched several times in June and July in response to warm weather demand Successfully converted from base load to cycling facility 10
Slide 11: Bristol Water CMA Progress
Bristol Water CMA Progress Regulator review is nearing conclusion ► Provisional findings published on July 10, 2015 ► CMA provisionally granted £28M additional operating expenditure ► Provisionally lowered enhancement capex by £8M while removing projects that could have cost £25M ► Provisional net g
Slide 12: Financial Overview: Expenses
Financial Overview Expenses 140 Drivers of Expense Variance -21% 120 100 80 -22% In $ millions 60 ► Reduced expenses from lower production at Cardinal 40 ► Lower administrative expenses 20 ► Higher project costs for project development 0 Q2 2014 Q2 2015 YTD YTD 2014 2015 12
Slide 13: Cash Resources
Cash Resources As at June 30 As at Dec 31 (in millions of Canadian dollars unless otherwise noted) 2015 2014 Power 38.5 36.6 Utilities- Water 6.8 13.3 Corporate 5.9 8.9 Unrestricted cash & cash equivalents 51.2 58.8 Less: cash with access limitations Power (21.7) (18.2) Utilities – Water1 (6.8) (13.
Slide 14: Debt Profile
Debt Profile Capital structure aligned to cash flow profile of businesses Long-Term Debt Maturity Profile In Compliance with all Covenants1 Covenant June 30, 2015 Amherstburg DSCR Min 1.20x 1.68x Hydros Senior Bonds – DSCR Min 1.20x 1.53x Subordinated bonds - DSCR Min 1.05x 1.30x Erie Shores DSCR Mi
Slide 15: 2015 Outlook
2015 Outlook1 ► Adjusted EBITDA in 2015 expected to be between $115M to $125M, reflecting: • Lower contribution from Cardinal; • Reduced power pool rates in Alberta; • Bristol Water operates under Ofwat’s Dec 2014 final determination between Q2 and Q4; • A return to normal dividends from Värmevärden
Slide 16: Priorities in 2015
Priorities in 2015 Secure improved outcome at Bristol Water ► Work with Bristol Water management to ensure successful outcome of CMA review ► Final determination is expected by Sept 3 Pursue Growth Initiatives ► Begin construction on recently approved wind projects in Q3 ► Secure further approvals f
Slide 17: Solid Fundamentals
Solid Fundamentals High quality, growing diversified portfolio Solid balance sheet All near-term projects have reached COD and next phase moving towards construction Experienced team with strong relationships across the infrastructure spectrum 17
Slide 18: Appendix
CAPSTONE INFRASTRUCTURE
Slide 19: Power Segment Performance: Seasonality
Power Segment Performance Seasonality Actual Average long-term production (GWh) (1) Q2 2015 Q2 2015 variance Type PPA Expiry Q1 Q2 from norms Q3(2) Q4(2) Annual Wind(3) 2020 - 2037 123.2 165.5 129.3 (6%) 80.1 145.7 520.6 Biomass(3) 2029 44.3 49.8 45.5 (3%) 50.4 49.1 194.8 Hydro 2017 - 2042 46.6 31.4
Slide 20: Power Segment Performance
Power Segment Performance For the quarter ended June 30, 2015 (in millions of Canadian dollars Gas Wind1 Biomass1 Hydro Solar Development2 Total unless otherwise noted) Power generated (GWh) 6.0 123.2 44.3 46.6 11.0 n/a 231.1 Capacity factor (%) 3.3 25.2 83.9 59.7 25.3 n/a n.m.f. Availability (%) 61
Slide 21: Utilities Segment Performance: Bristol Water
Utilities Segment Performance Bristol Water Quarter Ended June 30 Variance (in millions of Canadian dollars unless otherwise noted) 2015 2014 (%) Water supplied (megalitres) 21,267 20,812 2.2 Revenue 52.1 59.4 (12.4) Adjusted EBITDA before non-controlling interest 22.7 30.3 (24.9) Adjusted EBITDA 11
Slide 22: Utilities Segment Performance: Värmevärden
Utilities Segment Performance Värmevärden Quarter Ended June 30 Variance (in millions of Canadian dollars unless otherwise noted) 2015 2014 (%) Heat production (GWh) 204 204 - Interest income 0.7 0.7 - Adjusted EBITDA & AFFO1 3.2 3.8 (16) 1 – Värmevärden’s contribution to Capstone’s AFFO consists of
Slide 23: 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 24: Non-GAAP Performance Measures (continued)
Non-GAAP Performance Measures Definitions (continued) Adjusted Funds from Operations (AFFO) AFFO is a non-GAAP financial measure that assists management, investors and other stakeholders in analyzing the cash flow available for future growth capital investments, acquisitions and dividends to common
Slide 25: Additional Details
Additional Details Glossary Investor Information AMP Quick Facts As at June Asset management plan, which is developed by water utilities in the UK 30, 2015 every five years & approved by Ofwat. Common shares outstanding 93,919,643 (TSX:CSE) Annual long-term average production (LTA) An average produc
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