Capital Power Corporation · TSX:CPX
Capital Power — Q3 2010 Earnings Presentation
18 slides from Capital Power's earnings presentation, Nov 1, 2010
Slide 1: Q3, 2010 Review Analyst Conference Call
Q3, 2010 Review Analyst Conference Call November 1, 2010 Brian Vaasjo, President & CEO Stuart Lee, CFO CONFIDENTIAL
Slide 2: Cautionary statement regarding forward-looking information
Cautionary statement regarding forward-looking information Certain information in this presentation and in responses to questions during this conference call contains forward-looking information. Actual results could differ materially from conclusions, forecasts or projections in the forward-looking
Slide 3: Corporate updates
Corporate updates Solid performance in Q3/10 with normalized EPS of $0.55 • Hedged position minimized impacts from low AB power prices in Q3/10 • Financial performance tracking slightly ahead of plan for 2010 Island Generation acquisition completed on Oct 19/10 • 275 MW facility is the first add
Slide 4: Q3/10 Operating performance
Q3/10 Operating performance Plant Generation Availability (GWh) Alberta commercial plants Operating performance Genesee 3 99% 475 in-line with expectations Joffre 98% 67 Clover Bar Energy Centre 63% 37 Average plant Taylor Coulee Chute 100% 7 availability (excluding Clover Bar Landfill Gas 92% 9 C
Slide 5: Q3/10 financial summary
Q3/10 financial summary Solid Q3/10 year-over-year financial performance with strong normalized EPS and FFO (excluding CPILP) Strong Alberta commercial plants and portfolio optimization operating margin • Higher margins realized on merchant trading • Estimated $8M insurance recovery for business
Slide 6: Financial performance – Q3/10
Financial performance – Q3/10 ($M, except earnings per share) Q3/10 Q3/09 % Change Revenues $508 $511 0.6% Gross margin(1,2) $209 $189 11% Operating margin(1,2) $156 $140 11% Net income $7 $14 50% Earnings per share $0.32 $0.64 50% Earnings per share (normalized)(2) $0.55 $0.42 31% Funds from operat
Slide 7: Calculation of normalized net income (Q3/10)
Calculation of normalized net income (Q3/10) CPC interest in CPLP 27.8% CPC interest in CPILP 8.3% = (27.8% x 29.8%) ($M) Q3/10 Net Income $7 Unrealized net gain in fair value of CPLP’s derivative instruments -$1 (including natural gas held for trading) • $7M x 27.8% x 50% (after-tax rate) Unrealize
Slide 8: Financial performance – September YTD, 2010
Financial performance – September YTD, 2010 ($M, except earnings per share) Q3/10 Q2/10 Q1/10 YTD/10 Revenues $508 $313 $499 $1,320 Gross margin(1,2) $209 $174 $210 $593 Operating margin(1,2) $156 $109 $161 $426 Net income (loss) $7 $(8) $13 $12 Earnings (loss) per share $0.32 $(0.37) $0.60 $0.55 Ea
Slide 9: 2010 financial outlook
9 2010 financial outlook Genesee 3 (G3) scheduled outage in October with an expected maintenance expense of ~$7M and lower operating margin for the facility Island Generation facility expected to contribute $4M in operating margin in Q4/10 Expect capex (excluding CPILP and acquisitions) of ~$8
Slide 10: Review of 2010 corporate priorities
Review of 2010 corporate priorities Priority Status Operational targets Plant availability of ≥ 94% 90% expected due to issues with Clover Bar units Sustaining capex of $60M On track Construction / development objectives CPC’s share of final costs for Keephills 3 On track project at ≤ $955M wi
Slide 11: Total shareholder return (Sep 30/10 YTD)
Total shareholder return(1) (Sep 30/10 YTD) 35% 30% 25% 20% 17.2% Peer Average 15% 17.0% 10% TSX Comp Total Return 5% 7.5% 0% A Em B N C C A Fo En Tr . tla ro ap or an lg an rt br Tr er on -5% ok th nt ita ad is sC id an a la ic fie qu i lP ge an an nd sA Po ld in ow ad U lta Po w R Po til er a en e
Slide 12: Questions?
Questions? Investor Relations (780) 392-5305 (866) 896-4636 (toll-free) investor@capitalpower.com www.capitalpower.com CONFIDENTIAL 12
Slide 13: 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 and (v) normalized net income and (vi) normalized earnings per share as financial performance measures. These ter
Slide 14: 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 corporate administration and business development expenses (indirect administration). The presentation of the pro forma consolidated information for the nine months end
Slide 15: Non-GAAP financial measures (cont’d)
Non-GAAP financial measures (cont’d) Normalized net income and normalized earnings per share The Company uses normalized earnings per share to measure performance by period on a comparable basis. Normalized earnings per share is based on net income according to Canadian GAAP adjusted for items that
Slide 16: 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 17: Forward-looking information (cont’d)
Forward-looking information (cont’d) costs for ongoing operations and maintenance of EPCOR’s Rossdale plant and assets; (xx) expectations regarding the impact on Capital Power of the plan for a new GHG emission regulation as announced by the Canadian Environment Minister in June 2010 and expectation
Slide 18: Forward-looking information (cont’d)
Forward-looking information (cont’d) economic conditions; (viii) competitive pressures; (ix) construction; (x) availability and cost of financing; (xi) foreign exchange; (xii) availability and cost of labour, equipment and management resources; (xiii) performance of counterparties, partners, contrac