Transalta Corporation · TSX:TA
Transalta — Investor Presentation (September 2014)
25 slides from Transalta's investor presentation, September 2014
Slide 1: Investor Presentation
Investor Presentation September 2014 1
Slide 2: Forward Looking Statements
Forward Looking Statements This presentation may contain forward looking statements, including statements regarding the business and anticipated financial performance of TransAlta Corporation in 2014, 2015 and subsequent years. All forward looking statements are based on our beliefs and assumptions
Slide 3: Strategic & Financial Objectives
Strategic & Financial Objectives 3
Slide 4: TransAlta – Key Messages
TransAlta – Key Messages • ~9,000 MW spanning multiple fuels and Leading Diversified Power markets Generation Company • ~65 facilities • ~2,200 MW of renewable energy • 100 years of operating history Proven Track Record • Disciplined approach to capital allocation • Highly contracted asset base Soun
Slide 5: Our Business
Our Business • Canada’s largest publicly traded wholesale power generator & marketer with over 100 Coal: years of operating experience 4,930 MW • Diversified asset base with ~65 facilities strategically positioned in Canada, Western Gas: U.S. and Western Australia 1,695 MW • Total fleet capacity
Slide 6: Positioned For Growth & Value Creation
Positioned For Growth & Value Creation Objectives for driving long-term value for shareholders Optimize base business Invest in profitable growth • Re-contract to stabilize cash flows • Growth through acquisitions and and extend asset life greenfield • Continuously manage operating and • Disciplined
Slide 7: Executing the Strategy
Executing the Strategy Strategic initiatives since 2013 • Created TransAlta Renewables Inc. as a competitive growth vehicle • Re-contracted ~835 MW of capacity under long-term agreements and expanded C&I Energy Services business • Advanced Sundance 7 and our Fort McMurray West 500kV transmission pro
Slide 8: TransAlta’s 5-Year Growth Track Record
TransAlta’s 5-Year Growth Track Record Disciplined growth with a focus on contracted assets 2008 2009 2010 2010 2011 80 MW 694 MW 123 MW 132 MW 19 MW Kent Hills Canadian Hydro Ardenville / Kent Hills 2 Summerview 2 / Blue Trail Bone Creek 2011 2012 2013 2013 2014 225 MW 125 MW 68 MW 144 MW 150 MW Ke
Slide 9: Creation of TransAlta Renewables
Creation of TransAlta Renewables One of the Largest Publicly-Traded Renewable Companies in Canada 29 29 1,255 1,255 $1.31.3 $billion 1.3 $$2.0 2.0 2.0 29 renewable power generation renewable facilities power 1,255 generation megawatts installed megawatts renewable power generation megawatts installe
Slide 10: Hedges mitigating impact of low power prices
Hedges mitigating impact of low power prices Year-over-year electricity prices Total portfolio contractedness1 $/MWh MW 90% 84% 80% 78% 2014 Contracted prices AB ~$55/MWh Pac ~$40/MWh 2015 Contracted prices AB ~$50 - $55/MWh Pac ~$40 - $45/MWh ¹ Capacity adjusted volumes 10
Slide 11: Financial Review & Outlook
Financial Review & Outlook 11
Slide 12: Performance Highlights
Performance Highlights 3 months ended June 30 6 months ended June 30 (in $CAD millions) 2014 2013 Change 2014 2013 Change Comparable EBITDA $213 $247 $(34) $523 $515 $8 Funds from Operations $154 $184 $(30) $392 $377 $15 Free Cash Flow $19 $57 $(38) $158 $171 $(13) Sustaining Capital $107 $101 $6 $1
Slide 13: Fleet Availability
Fleet Availability Strong availability supported by lower unplanned outages Availability Unplanned Outage Rate Q2 2014 Q2 2013 Q2 2014 Q2 2013 Sundance / Keephills PPA 86.0% 69.4% 7.2% 21.1% Centralia(1) 68.9% 76.7% 1.2% 0.2% Other Coal 90.1% 88.6% 9.9% 2.8% Gas 89.0% 90.2% 4.0% 5.1% Wind 93.5% 93.8
Slide 14: 2014 Objectives
2014 Objectives Target Status Financial • EBITDA: $1,015 - $1,065 million $523 million year to date • FFO: $743 - $793 million $392 million year to date • Free Cash Flow: $293 - $343 million $158 million year-to-date • Refinance maturities and fund growth ~$1.5 billion in liquidity at end of Q2 • Co
Slide 15: Funding Update
Funding Update Reduced Debt by $300 Million • Completed the sale of CE Generation and closed a secondary offering of TransAlta Renewables Inc. common shares for total net proceeds of ~$320 million with proceeds used to repay debt Increased Liquidity to $1.5 Billion • Completed a public offering of U
Slide 16: Markets and Growth
Markets and Growth 16
Slide 17: Markets where TransAlta is positioned to grow
Markets where TransAlta is positioned to grow Alberta Western U.S. • GDP growth of 3 – 4% per year • ~1.4% annual load growth over next • 6,000 MW of new generation by ten years 20221 • California: 15,000 MW by 2020 • MWs grow faster than GDP due to • WECC: 25,000-30,000 MW by 2020 changes in genera
Slide 18: Business Highlights – South Hedland
Business Highlights – South Hedland • Reached an agreement to build, own and operate a 150 MW combined gas power station in South Hedland, Western Australia • The project is fully contracted for 25 years - PPAs are in place with Horizon Power and Fortescue • EPC contract in place with IHI Engineerin
Slide 19: Business Highlights – Other growth projects
Business Highlights – Other growth projects Creating value through Growth • Construction of natural gas pipeline in Western Australia with joint venture partner planned to start in August. Expected COD date of December 31st 2014 • Advanced Sundance 7, having filed our AUC permits and issued an Reque
Slide 20: Alberta – Strong Fundamentals
Alberta – Strong Fundamentals Alberta Interconnected Electric System (AIES) • Alberta continues to see Reserve Margin, 2000 - 20191 considerable demand growth due to industrial and mining activities, and 45% their indirect impacts 40% 35% • Also, significant retirements in capacity in 30% next 10 ye
Slide 21: Historical Power Prices in Alberta
Historical Power Prices in Alberta Since deregulation, AB Pool prices have averaged $65 / MWh Source: AESO 21
Slide 22: Alberta Forward Market
Alberta Forward Market AB forward market is a poor predictor of future spot market settles Forward prices tend to reflect spot fundamentals not future fundamentals Average annual Alberta power prices compared to historical forward Alberta power prices $/MWh Data: NGX, Alberta Electric System Operato
Slide 23: Environmental strategy
Environmental strategy • Canadian federal regulations amended in 2012 designate useful life of coal plants as 50 years • Weighted average life of TransAlta’s Alberta coal fleet is ~17 years • Flexibility provisions enabling unit substitution and ability to apply years from one closed unit to another
Slide 24: Long-term Upside Potential
Long-term Upside Potential Significant increase in cash flows once Alberta legislated PPAs expire ¹Illustrative representation of estimated average EBITDA over period. Actual EBITDA could vary from those shown due to a number of factors 24
Slide 25: Focused on Creating Value
Focused on Creating Value • Integrated approach to driving long-term shareholder value • Diversified and highly contracted portfolio • Attractive and sustainable dividend • Strong balance sheet and free cash flow • Well positioned for growth in markets with strong fundamentals • Significant upside p