Capstone Infrastructure Corp · TSX:CSE.PR.A
Capstone Infrastructure — Q2 2014 Earnings Presentation
28 slides from Capstone Infrastructure's earnings presentation, Aug 13, 2014
Slide 1: Building for Tomorrow: Q2 2014 Results Presentation
BUILDING FOR TOMORROW Q2 2014 Results Presentation August 13, 2014
Slide 2: Notice to Readers
Notice to Readers Certain of the statements contained within this document are forward-looking and reflect management's expectations regarding the future growth, results of operations, performance and business of the Capstone Infrastructure Corporation (the "Corporation") based on information curren
Slide 3: Q2 2014 Snapshot
Q2 2014 Snapshot Strong overall performance in quarter & year to date Revenue Adjusted EBITDA1 AFFO1 +17.6% +26.5% +40.9% In $ millions In $ millions +13.8% In $ millions +24.1% +33.5% 1 - "Adjusted EBITDA“ and “Adjusted Funds from Operations” are non-GAAP financial measures and do not have any stan
Slide 4: 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 2014 2013 (%) 2014 2013 % Revenue 106.4 93.5 13.8 220.8 187.8 17.6 Net income 8.4 14.6 (42.5) 27.9 30.5 (8.7) Adjusted EBITDA1,2 39
Slide 5: Adjusted EBITDA
Adjusted EBITDA1 Variance in AFFO Drivers of Positive Adjusted EBITDA Variance +26.5% ► Expanded operating wind power portfolio ► Lower operating costs at Cardinal ► Positive foreign currency exchange impact & higher In $ millions +24.1% 2 revenue at Bristol Adjusted EBITDA By Geography Water 35% Ca
Slide 6: Adjusted Funds from Operations
Adjusted Funds from Operations1 Drivers of Positive AFFO Variance ► Growth in Adjusted +40.9% EBITDA ► Partially offset by higher debt service & maintenance capex due to expanded power portfolio In $ millions 2 +33.5% AFFO By Geography 12% 19% Canada Sweden 69% United Kingdom 6 1 - Please refer to s
Slide 7: Transforming Cardinal
Transforming Cardinal Cycling conversion project ► Preparing for the start of the new contract and operations as a dispatchable facility in 2015 ► Investing $30 million for major maintenance, retrofitting and life extension ► Establishing processes to ensure profitable market operation Serving Ontar
Slide 8: Proven Execution Skill
Proven Execution Skill Advancing our near-term wind projects ► 10 MW Skyway 8 project in Ontario ⁻ A declared commercial operations date of Aug 14, 2014 ► 24 MW Saint-Philémon project in Québec ￚ $60.6M financing arranged in May ￚ Project proceeding as planned ► 25 MW Goulais project in Ontario ￚ Co
Slide 9: Cash Flow Profile Evolution: 2010
Cash Flow Profile Evolution Our cash flow profile in 2010… Whitecourt Chapais Cardinal Erie Shores Sechelt Dryden Hluey Lakes Wawatay 2010 2017 2022 2027 2032 2037 2042 2047 2052 9
Slide 10: Cash Flow Profile Evolution: Now in 2014
Cash Flow Profile Evolution …and now in 2014 Whitecourt Chapais Cardinal Erie Shores NS&ON Wind Wind Projects Amherstburg Sechelt Dryden Hluey Lakes Wawatay Bristol Water Värmevärden 2010 2017 2022 2027 2032 2037 2042 2047 2052 10
Slide 11: Financial Overview: Revenue
Financial Overview Revenue Drivers of Revenue Variance +17.6% +13.8% In $ millions ► Increase in wind power production ► Favourable foreign currency translation at Bristol Water ► Revenue growth at Bristol Water arising from higher regulated water rates & increased water consumption 11
Slide 12: Financial Overview: Expenses
Financial Overview Expenses Drivers of Expense Variance +9.3% +3.8% In $ millions ► Foreign currency translation and higher operating expenses at Bristol Water due to maintenance activities ► Expanded wind power portfolio ► Higher administrative expenses ► Partially offset by lower gas transportatio
Slide 13: Cash Resources
Cash Resources As at June 30 As at Dec 31 (in millions of Canadian dollars unless otherwise noted) 2014 2013 Power 28.0 29.0 Utilities- Water 9.5 9.1 Corporate 31.1 7.6 Unrestricted cash & cash equivalents 68.6 45.7 Less: cash with access limitations Power (17.2) (18.1) Utilities – Water1 (9.5) (9.1
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 Jun 30, Covenant 2014 Amherstburg DSCR Min 1.15x 1.47x Hydros Senior Bonds – DSCR Min 1.2x 1.80x Subordinated bonds - Min 1.05x 2.84x DSCR Erie Shores DSCR Min
Slide 15: 2014 Outlook
2014 Outlook1 ►Expect Expect Adjusted Lower EBITDA Adjusted in 2014Contribution EBITDA to be betweenin$150M 2013 to $160M, reflecting: ￚ Stable performance from power facilities & better than anticipated economics from Cardinal ￚ Better than expected impact of foreign exchange rates at Bristol Water
Slide 16: Priorities in 2014
Priorities in 2014 Advance Development Pipeline ► Focus on completing 24 MW Saint-Philémon project on time & budget ► Started construction at Goulais in June; financing expected in early fall ► Mid-term projects moving through permitting process Maximize Performance of Existing Businesses ► Preventi
Slide 17: Priorities in 2014: Growth Initiatives
Priorities in 2014 Pursuing Growth Initiatives Organic: ► Momentum in organic growth projects comprising more than 500 million in capital spending ► Complete Bristol Water capital expenditure program for current regulatory period (April 2010 – March 2015) ► Complete PR 14 price review process for ne
Slide 18: Priorities in 2014: New Investment Opportunities
Priorities in 2014 Pursue Growth Initiatives New Investment Opportunities: Power Utilities P3 Transportation • Traditional • Water • Courts • Roads • Renewable • Gas (transmission & • Hospitals • Rails • District heating & distribution) • Schools • Airports cooling • Electric (transmission • Transpo
Slide 19: Strong Fundamentals
Strong Fundamentals High quality, diversified portfolio that is delivering strong performance Substantial investment in Bristol Water, a perpetual business we expect to generate growing cash flow Solid balance sheet New development pipeline and proven execution skills Experienced team with strong re
Slide 20: Appendix
CAPSTONE INFRASTRUCTURE
Slide 21: Power Segment Performance
Power Segment Performance Seasonality Actual Actual Average long-term production (GWh) (1) Type PPA Expiry Q2 2014 Q2 2013 Q1 Q2 Q3 Q4 Annual Gas 2034 192.8 307.9 341.8 272.6 302.3 334.1 1,250.8 Wind(2) 2020 - 2037 96.9 56.2 140.7 90.4 75.4 135.9 442.4 Biomass(2) 2014 46.6 47.2 50.2 45.6 50.3 49.3 1
Slide 22: Power Segment Performance: Quarter Ended Jun 30
Power Segment Performance For the quarter ended Jun 30, 2014 (in millions of Canadian dollars Gas Wind1 Biomass1 Hydro Solar Development Total unless otherwise noted) Power generated (GWh) 192.8 96.9 46.6 58.0 12.5 n/a 406.8 Capacity factor (%) 60.3 23.5 92.5 74.3 28.7 n/a n.m.f. Availability (%) 98
Slide 23: Utilities Segment Performance: Bristol Water
Utilities Segment Performance Bristol Water Quarter Ended Jun 30 Variance (in millions of Canadian dollars unless otherwise noted) 2014 2013 (%) Water supplied (megalitres) 20,812 20,695 0.6 Revenue 59.4 47.3 25.5 Adjusted EBITDA before non-controlling interest 30.3 23.3 30.1 Adjusted EBITDA 15.1 11
Slide 24: Utilities Segment Performance: Värmevärden
Utilities Segment Performance Värmevärden Quarter Ended Jun 30 Variance (in millions of Canadian dollars unless otherwise noted) 2014 2013 (%) Heat production (GWh) 204 209 (2.4) Interest income 0.7 0.7 3.0 Adjusted EBITDA & AFFO1 3.8 3.8 (1.5) 1 – Värmevärden’s contribution to Capstone’s AFFO consi
Slide 25: 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 26: Non-GAAP Performance Measures: Definitions (continued)
Non-GAAP Performance Measures Definitions (continued) Adjusted Funds from Operations (AFFO) Capstone’s definition of AFFO measures cash generated by activities of infrastructure business investments which is available for dividends and general corporate purposes. For wholly owned businesses, AFFO is
Slide 27: Assumptions
Assumptions Material factors or assumptions that were applied in formulating the forward-looking statements and financial outlook contained herein include or relate to the following: that the business and economic conditions affecting the Corporation's operations will continue substantially in their
Slide 28: Additional Details
Additional Details Glossary Investor Information AMP Quick Facts As at Jun Asset management plan, which is developed by water utilities in the UK 30, 2014 every five years & approved by Ofwat. Common shares outstanding 93,335,731 (TSX:CSE) Annual long-term average production (LTA) An average product
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