Capstone Infrastructure Corp · TSX:CSE.PR.A
Capstone Infrastructure — FY2012 Earnings Presentation
33 slides from Capstone Infrastructure's earnings presentation, Mar 8, 2013
Slide 1: Fiscal 2012 Results Presentation
Fiscal 2012 Results Presentation March 8, 2013
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 Capstone Infrastructure Corporation (the “Corporation”) based on information currently
Slide 3: 2012 Highlights
2012 Highlights ► Improved our financial 1 position ► Achieved strong operational 2 performance ► Established a new power 3 development subsidiary to broaden our capabilities 3
Slide 4: Solid Financial Performance
Solid Financial Performance In millions of Canadian dollars or on a per share basis unless Quarter Ended Dec 31 Variance Year Ended Dec 31 Variance otherwise noted 2012 2011 (%) 2012 2011 (%) Revenue 94.7 91.7 3.3 357.6 216.0 65.6 Expenses 54.8 56.0 (2.0) 206.6 160.1 29.1 Net income 16.3 (2.4) 769.0
Slide 5: Five Priorities in 2012
Five Priorities in 2012 2012 Priorities Initiatives Outcomes YTD 2012 AFFO by Business1,2 1. Refinance • Recapitalized Värmevärden & hydro Significantly reduced risk from balance sheet ~$200M in debt power facilities • Sold 20% interest in Bristol Water • Established new corporate credit facility 2.
Slide 6: Capstone Power Development
Capstone Power Development A new wholly-owned subsidiary of CSE ► CPD is focused on sourcing, developing & pursuing renewable & clean electricity generation projects ￚ Western Canada & US ► Positions CSE to participate in greenfield & brownfield project opportunities ￚ Potential to enhance sharehold
Slide 7: Cardinal
Cardinal Discussions ongoing ► Re-engaged in discussions with OPA in new year ￚ Continuing dialogue with various government ministries with OPA’s approval ► Continue to believe Cardinal has significant long-term value & a vital role to play in Ontario’s electricity system ► Securing a new contract r
Slide 8: Well Positioned
Well Positioned Ready for next phase of our evolution ► Significantly diversified portfolio ► Broader international reach ► Substantially lower risk profile ► Re-focused on growth ► Better positioned to create value for shareholders 8
Slide 9: Fiscal 2012 Financial Overview: Revenue
Fiscal 2012 Financial Overview Revenue +65.6% In $ millions ► Reflects full year of contribution from Bristol +3.3% Water & Amherstburg ► Offset by slightly lower power production ￚ Less production at Cardinal due to maintenance outage ￚ Less production at Erie Shores & hydro facilities due to wind
Slide 10: Fiscal 2012 Financial Overview: Adjusted EBITDA
Fiscal 2012 Financial Overview Adjusted EBITDA1,2 +60.1% In $ millions ► Primarily due to contributions from Bristol Water, -1.1% Amherstburg & Värmevärden as well as sale of renewable energy credits at Whitecourt ► Quarterly variance due to lower ownership interest in Bristol Water in Q4 2012 vs.Q4
Slide 11: Fiscal 2012 Financial Overview: Adjusted Funds from Operations
Fiscal 2012 Financial Overview Adjusted Funds from Operations 2012 AFFO by Business1,2 Variance in AFFO2,3 +1.9% ► Positive contributions from utilities segment ► Offset by lower AFFO In $ millions from power segment ￚ Higher +34.6% maintenance capex 2012 AFFO by Country1,2 ￚ Impact of amortizing de
Slide 12: Fiscal 2012 Financial Review: Expenses
Fiscal 2012 Financial Review Expenses Total expenses increased by 47.2% over 2011 (in millions of Canadian dollars unless otherwise noted) Year Ended Dec 31 Variance 2012 2011 (%) Corporate1 11.1 10.0 10.7 Power segment 101.8 100.5 1.3 Utilities segment – Water2 93.4 21.6 332.4 Project development c
Slide 13: Fiscal 2012 Financial Overview: Power production
Fiscal 2012 Financial Overview Power production Actual Actual Average long-term production (GWh) (1) Type Facility PPA Expiry 2012 2011 Q1 Q2 Q3 Q4 Annual Gas Cardinal 2014 1,231.9 1,256.1 342.9 278.1 303.5 333.3 1,257.8 Wind Erie Shores 2026 233.4 236.7 76.3 52.5 34.0 76.9 239.7 Biomass Whitecourt
Slide 14: Power Segment Performance
Power Segment Performance For the year ended Dec 31, 2012 (in millions of Canadian dollars unless Gas Wind Biomass1 Hydro Solar Development Total otherwise noted) Power generated (GWh) 1,231.9 233.4 197.0 157.0 39.5 n/a 1,858.8 Capacity factor (%) 92.9 26.8 95.3 50.1 22.5 n/a n.m.f. Availability (%)
Slide 15: Utilities Segment Performance: Bristol Water
Utilities Segment Performance Bristol Water Year Ended Dec 31 (in millions of Canadian dollars unless otherwise noted) 2012 20111 Water supplied (megalitres) 81,245 19,700 Revenue 178.4 43.6 Adjusted EBITDA 48.5 15.6 AFFO2 8.1 4.0 1 – Capstone acquired a 70% interest in Bristol Water on October 5, 2
Slide 16: Utilities Segment Performance: Värmevärden
Utilities Segment Performance Värmevärden Year Ended Dec 31 Variance (in millions of Canadian dollars unless otherwise noted) 2012 20111 (%) Heat production (GWh) 1,078 712 51.4 Interest income 3.4 5.0 (33.2) Adjusted EBITDA & AFFO2 5.4 5.0 6.6 1 – Only nine months of activity from the date of acqui
Slide 17: Cash Resources
Cash Resources As at Dec 31 (in millions of Canadian dollars unless otherwise noted) 2012 2011 Power 20.9 14.0 Utilities- Water 25.3 35.4 Corporate 3.3 8.2 Unrestricted cash & cash equivalents 49.6 57.6 Less: cash with access limitations Power (8.4) (10.1) Utilities – Water1 (25.3) (35.4) Cash & cas
Slide 18: Debt Profile
Debt Profile Capital structure aligned to cash flow profile of businesses Long-Term Debt Maturity Profile Covenants Covenant Dec 31, 2012 CPC - Cardinal Debt/Capitalization Ratio1 Max 0.70x 0.62x Fixed Charge Coverage Ratio Min 1.25x 6.10x Interest Coverage Ratio Min 2.50x 3.84x Erie Shores Debt DSC
Slide 19: 2013 Outlook: Power
2013 Outlook1 Power Expect Slightly Higher Adjusted EBITDA in 2013 DRIVERS FOR 2013 ‣ Less maintenance downtime at Cardinal ‣ Performance in line with long-term average production across portfolio subject to wind, water flows & sunlight ‣ Lower average effective gas transportation toll of $1.76 per
Slide 20: 2013 Outlook: Bristol Water
2013 Outlook1 Bristol Water Expect Lower Adjusted EBITDA Contribution in 2013 DRIVERS FOR 2013 ‣ Steady demand with little seasonal variation ‣ Benefitting from a ~6.9% increase in the regulated water tariff starting on April 1, 2013 MITIGATING FACTORS ‣ Capstone will hold a 50% interest in Bristol
Slide 21: 2013 Outlook: Värmevärden
2013 Outlook1 Värmevärden Expect Lower Adjusted EBITDA Contribution in 2013 ‣ Performance expected to continue to support fixed interest payments on Capstone’s shareholder loan & dividends on our equity investment ‣ Interest income will be lower in 2013 ￚ Capstone repatriated a portion of its shareh
Slide 22: 2013 Outlook: Adjusted EBITDA
2013 Outlook1 ►Expect ExpectLower Adjusted Adjusted EBITDA to EBITDA Contribution be ~$110in- 2013 $120M ► Expected performance from portfolio supports dividend while allowing us to retain cash ￚ Represents a ~$6M, or 4.3%, increase in Adjusted EBITDA over 2012 on pro forma basis if we had held 50%
Slide 23: Creating Value for Shareholders: Securing new PPA for Cardinal
Creating Value for Shareholders Securing new PPA for Cardinal ► Negotiations are continuing ￚ Timing beyond our control ► Focus is on finding long-term solution ► Exploring potential for extension to existing PPA ￚ Provide additional lead time for procurement 23
Slide 24: Creating Value for Shareholders: Drivers of Value
Creating Value for Shareholders Drivers of Near-Term Value ► Availability & performance of power facilities ► Achieving strong operational performance across all businesses ► Meeting regulatory targets at Bristol Water Drivers of Long-Term Value ► Completing smart acquisitions & development projects
Slide 25: Creating Value: Focus on operational excellence
Creating Value Focus on operational excellence Seeking opportunities to increase cash flow ► Sale of renewable energy credits (RECs) at Whitecourt ► Pilot program for WindBOOST at Erie Shores ￚ May help increase annual energy output ￚ Currently installed on two turbines for assessment 25
Slide 26: Creating Value: Achieving regulatory targets at Bristol Water
Creating Value Achieving regulatory targets at Bristol Water ► Executing capital projects, which will drive growth in RCV ► Focused on achieving regulatory targets ￚ Leakage of < 50M litres/day ￚ Top quartile ranking on Ofwat’s Service Incentive Mechanism customer service measure Record of meeting &
Slide 27: Creating Value: Growth & diversification
Creating Value Growth & diversification Lower payout ratio provides better flexibility to internally fund future acquisitions or development projects 27
Slide 28: Creating Value: Our strengths
Creating Value Our strengths 1 ► Significant expertise in infrastructure investment & management across core infrastructure categories ► New power development capability complements our skill set & 2 enables us to participate in earlier-stage opportunities ► Strong relationships in infrastructure in
Slide 29: Appendix
CAPSTONE INFRASTRUCTURE
Slide 30: 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 31: Non-GAAP Performance Measures (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 32: 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 33: Additional Details
Additional Details Glossary Investor Information AMP Quick Facts Asset management plan, which is developed by water utilities in the UK every five years & approved by Ofwat. Common shares outstanding 72,445,509 Annual long-term average production (LTA) Preferred shares outstanding 3,000,000 An avera
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