Capital Power Corporation · TSX:CPX
Capital Power — Non-Deal Roadshow (September 2010)
32 slides from Capital Power's roadshow presentation, September 2010
Slide 1: Investor Meetings September, 2010
Investor Meetings September, 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 contains forward-looking information. Actual results could differ materially from conclusions, forecasts or projections in the forward-looking information, and certain m
Slide 3: Overview of Capital Power
Overview of Capital Power New company formed in July/09 from EPCOR Utilities Inc.’s spin-off of its power generation business Canadian-based independent power producer (IPP) operating in North America and trading on the Toronto Stock Exchange (TSX: CPX) Business model: stable and growing cash
Slide 4: Corporate strengths
Corporate strengths One of Canada’s largest IPPs with interests in 31 facilities totaling ~3,500 MW of owned and/or operated Large, high quality generation capacity; geographic, fuel source and generation portfolio counterparty diversification; generally 60% coal, 20% natural gas and 20% renewables
Slide 5: Large, high quality generation portfolio
Large, high quality generation portfolio Interests in 31 facilities (~3,500 MW) Directly Owned 30.0% LP Interest(3) Alberta Contracted Capital Power Income L.P. ON/BC Contracted Alberta 20 Facilities Two Facilities Three Facilities Commercial 1,668 MW(1) 820 MW 80 MW (463 MW)(2) Six Facilities Sunda
Slide 6: Strategic North American platform
Strategic North American platform Calstock Area where contracted assets could potentially be added Area where merchant Capital Power facilities or contracted assets could potentially be Capital Power Income L.P. facilities added CONFIDENTIAL 6
Slide 7: Strong operating history, fleet availability
Strong operating history, fleet availability Very good operating performance history with high plant availability Generation Plant (GWh) Availability 12,000 95% 95% 91% (1) 94% 90% (2) 100% 9,000 75% 6 months 6,000 50% 3,000 25% - 0% 2006 2007 2008 2009 2010 Capital Power Generation Pro Rata CPILP G
Slide 8: Solid platform for growth - Strategy
Solid platform for growth - Strategy Throughout business cycle maintain good access to capital Target 50% contracted cash flow and 50% merchant • Maintain investment grade credit rating • Commitment to maintain an attractive dividend yield Significant growth through acquisitions and developmen
Slide 9: Island Generation facility acquisition
Island Generation facility acquisition Capital Power LP signed a Purchase & Sale Agreement with Kelson Canada Inc. on Aug 2/10 to acquire the 275 MW Island Generation facility for $207M (plus closing costs and working capital adjustments) Expected to be modestly and immediately accretive to earn
Slide 10: Wind power project contract wins
Wind power project contract wins Quality Wind Port Dover & Nanticoke Location Tumbler Ridge, BC Norfolk & Haldimand, ON Size 142 MW 105 MW Project costs ~$455M ~$340M Expected COD Before end of 2012 Q4, 2012 Expected capacity ~35% (5 year wind study) ~35% (3 year wind study) factor Contract & 25-yea
Slide 11: Potential development opportunities
Potential development opportunities Kingsbridge II Wind Power Project Submitted into the Ontario Power Authority’s (OPA’s) Feed-In Tariff program Proposal to generate up to 270 MWs in one of Ontario’s best areas for wind power generation near existing 40 MW Kingsbridge I Expect OPA to announce
Slide 12: Keephills project update
Keephills 3 project update 495 MW coal-fired plant, supercritical boiler technology (same as Genesee 3) Partnership with TransAlta Total project cost of ~$1.9B (CPX 50% portion = $955M) Commissioning activities taking place on the boiler, turbine and electrical systems Plant expected to co
Slide 13: Execution of growth strategy
Execution of growth strategy Confirmed capacity growth 4,500 4,000 3,500 3,000 (MW) 2,500 2,000 1,500 1,000 500 0 2009 2010 2011 2012 Base at IPO CBEC 2 & 3 Island Generation Keephills Port Dover Wind Quality Wind Since Capital Power’s IPO launch a year ago, 970 MW of new capacity has been added or
Slide 14: Financial strength and access to capital
Financial strength and access to capital(1) Strong balance sheet with BBB investment grade credit rating (S&P/DBRS) • $1.2B in credit facilities, of which $0.7B available • Net debt / total capitalization of ~34% (non-consolidated basis) • Consolidated assets of ~$5.0B with only ~$1.8B in long-ter
Slide 15: YTD 2010 financial summary
YTD 2010 financial summary Performance in the first half of the year is tracking close to plan All three units at Genesee affected by direction to curtail generation to accommodate transmission system upgrades in Q2 that contributed to: • Spikes in AB power prices • Foregone availability incenti
Slide 16: Financial performance
Financial performance Six months ended ($M, except earnings per share) Jun 30/10 Dec 31/09 Revenues $812 $1008 Gross margin(1,2) $384 $371 Operating margin(1,2) $270 $260 Net income $5 $21 Earnings per share $0.23 $0.97 Earnings per share (normalized)(2) $0.60 $0.60 Funds from operations(2) $165 $16
Slide 17: Merchant upside – Alberta power market
Merchant upside – Alberta power market Alberta (AB) has competitive wholesale energy and ancillary services market operated by the Alberta Electric System Operator (AESO) Entire province is a single zone where prices are determined by the bid price of the marginal unit needed to balance demand a
Slide 18: Alberta power prices
Alberta power prices Alberta spot power prices were volatile in Q2/10 and averaged $81/MWh, up 99% from Q1/10 and 151% from Q2/09 Increase due to generation curtailments at all 3 units at Genesee to accommodate transmission system upgrades, Genesee 2 scheduled outage, and other plant de-rates on
Slide 19: Strong cash flow generation
Strong cash flow generation $M (on a de-consolidated basis) $240(1) FFO excluding non-controlling interests in CPILP ~($100) Less: dividends ~($30 - $40) Less: avg maintenance capex (excluding CPILP) ~($10) Less: other capex ~$90 - $100 Annual free cash flow Generating significant discretionary cash
Slide 20: 2010 financial outlook
2010 financial outlook 2010 outlook unchanged from outlook disclosed at 2009 year-end Genesee 3 outage scheduled in Q4 with an expected operating expense of ~$7M and lower operating margin for the facility For balance of 2010, no requirements for further curtailments have been published Tota
Slide 21: Financing updates
Financing updates Two base shelf prospectuses filed in April, positioning the Company to fund growth plans through the issuance of up to $1B in equity and $1B in debt Refinanced $245M in debt repayments to EPCOR in Jun/10 through drawdown on credit facilities At June 30, debt-to-total capitali
Slide 22: 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 23: Investment highlights summary
Investment highlights summary Large, high quality generation portfolio Solid Modern fleet platform with very good for operating growth history Diversified Financial portfolio in strength with attractive North access to American capital markets Long-term contracts & merchant position provides stable
Slide 24: 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 25: Forward-looking information (cont’d)
Forward-looking information (cont’d) of the Acquisition; (xxx) expectations regarding peak demand, load and power generation growth on Vancouver Island and its impact on Island Generation’s future value; (xxxi) the expected timing of the closing of the purchase transaction for the Acquisition, and (
Slide 26: Forward-looking information (cont’d)
Forward-looking information (cont’d) This presentation includes the following updates to previously disclosed forward-looking statements: (i) expectations regarding capital expenditures in 2010 have been revised to reflect a change in the timing of spending on the Keephills 3 project; (ii) the timin
Slide 27: 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 earnings per share as financial performance measures. These terms are not defined financial me
Slide 28: 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 three and six m
Slide 29: 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 30: Contact information
Contact information Investor Relations (780) 392-5305 (866) 896-4636 (toll-free) investor@capitalpower.com www.capitalpower.com CONFIDENTIAL 30
Slide 31: Financial performance
Financial performance ($M, except earnings per share) Q2/10 Q1/10 Q4/09 Q3/09 Total Revenues $313 $499 $497 $511 $1,820 Gross margin(1,2) $174 $210 $182 $189 $755 Operating margin(1,2) $109 $161 $120 $140 $530 Net income (loss) $(8) $13 $7 $14 $26 Earnings (loss) per share $(0.37) $0.60 $0.33 $0.64
Slide 32: Total shareholder return
Total shareholder return(1) Dec 31/09 – Aug 31/10 115% 110% 105% 100% 95% 90% 31-Dec 31-Jan 28-Feb 31-Mar 30-Apr 31-May 30-Jun 31-Jul 31-Aug CPX Peers TSX Total Return Index Peer group consists of : Algonquin Power, Atlantic Power, Brookfield Renewable, Canadian Utilities, Emera, Enbridge, Fortis, N