Slide 1: Analyst Conference Call Q3/09 Financial Results
Analyst Conference Call Q3/09 Financial Results November 2, 2009 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 oral statements made during this presentation contains forward-looking information. Actual results could differ materially from conclusions, forecasts or projections in the forward-looking informa
Slide 3: Q3/09 Highlights
Q3/09 Highlights Solid quarterly results in-line with expectations Continued low natural gas prices continue to impact Alberta power prices • Exposure to merchant power prices minimized with ~90% of Alberta commercial portfolio hedged in 2010 Modest adjustments to timing and costs for Keephill
Slide 4: Q3/09 Operating Performance
Q3/09 Operating Performance Q3, 2009 Plant Generation Availability (Gwh) Alberta commercial plants Genesee 3 97% 470 Joffre 96% 89 Clover Bar Energy Centre 1 and 2(1) 75% 16 Taylor Coulee Chute 100% 12 Clover Bar Landfill Gas 90% 9 Weather Dancer 55% - 95% 596 Alberta contracted plants Genesee 1 100
Slide 5: Alberta Power Prices
Alberta Power Prices Alberta spot power prices in Q3/09 improved 53% from previous quarter but still down 38% yoy Weak natural gas prices continue to negatively impact Alberta power prices Average realized price for Alberta commercial position in Q3/09 was $54/MWh Lower captured power price
Slide 6: Recent Developments
Recent Developments Capital Power partnering with TransAlta and Alstom Canada to develop world’s largest carbon capture and storage (CCS) project (Project Pioneer) • Development of a CCS facility at the Keephills 3 power plant (currently under construction) in Alberta • Using Alstom’s chilled ammo
Slide 7: Construction Projects
Construction Projects Keephills 3 • Total project cost increased ∼5.8% to $1.91B • CPX 50% portion = $955M • Cost increase related to additional labour for construction of the power island • Plant now expected to commence operations in Q2/11 vs. Q1 • Project continues to meet internal rates of ret
Slide 8: Financial Highlights – Q3/2009
Financial Highlights – Q3/2009 ($M, except earnings per share) Q3/09 Q2/09 Revenues $525 $537 Gross margin (excluding fair value changes) $189 $205 Operating margin $169 $176 Net income $14 $11 Net income (excluding fair value changes) $10 $7 Earnings per share (basic) $0.64 - Funds from operations
Slide 9: Calculation of Normalized Earnings
Calculation of Normalized Earnings Q3/09 Net Income $14 million Fair value changes in CPLP $16 million Fair value changes in EPLP $13 million EPLP tax adjustment $10 million Canadian tax rate 29% CPC interest in CPLP 27.8% CPC interest in EPLP 8.5% (27.8% x 30.6%) Net fair value change in CPC from C
Slide 10: Net Income
Net Income Q3/09 net income of $14M, compared to $11M in Q2/09 Significant items impacting quarter/quarter change: • Lower unrealized change in the fair value of EPCOR Power LP’s derivative instruments in Q3/09 • Higher net financing expense in Q3/09 of $9M • Lower administration costs in Q3/09
Slide 11: Hedging Alberta Spot Power Price Exposure
Hedging Alberta Spot Power Price Exposure Alberta Commercial Portfolio Consists of 6 facilities and generates 40% to 50% of operating margin(1) ~50% hedged ~90% hedged ~40% hedged @ low-$60/MWh @ mid-$60/MWh @ low-$70/MWh Q4-09 2010 2011 Sensitivity analysis to +/- $1/MWh change in Alberta power
Slide 12: Financial Outlook
12 Financial Outlook Q4-09 Expect Alberta power prices to remain soft Pre-tax impact of $10-$12M in maintenance expense and $5-6M in operating margin for Genesee 1 turnaround 2010 vs. 2009 Sale of remaining 15% interest of Battle River PPA in January, 2010 Scheduled maintenance outages for G
Slide 13: Financial Outlook (Cont’d)
13 Financial Outlook (Cont’d) Committed Capex(1) Q4-09E: ~$84M 2010E: ~273M } Keephills 3 Clover Bar (Units 2 & 3) Average annual maintenance capex: $30 - $40M Average annual other capex: $10 - $20M Keephills 3 Clover Bar Energy Centre 2009 CASH FLOW FROM OPERATIONS EXPECTED TO BE ROUGHLY IN
Slide 14: Investment Summary
Investment Summary Growth in North American power industry will continue over the long term Positive long-term fundamentals for the Alberta power market CPX well positioned to move through the trough we are experiencing today: • Current low natural gas price environment expected to improve • A
Slide 15: Questions?
Capital Power © Corporation Questions?
Slide 16: Non-GAAP Financial Measures
Non-GAAP Financial Measures Reconciliation of Operating Margin to Net Income ($M) Q3/09 Q2/09 Revenues 525 537 Energy purchases and fuel 307 287 Gross margin 218 250 Operations, maintenance, and direct administration 49 74 Operating margin 169 176 Deduct (add): Indirect administration 27 29 Deprecia
Slide 17: Non-GAAP Financial Measures (Cont’d)
Non-GAAP Financial Measures (Cont’d) Reconciliation of Funds from operations to Cash provided by operating activities Capital Power uses funds from operations to measure the Company’s ability to generate funds from current operations. Changes in working capital are primarily made up of intercompany