Capstone Infrastructure Corp · TSX:CSE.PR.A
Capstone Infrastructure — Q3 2014 Earnings Presentation
27 slides from Capstone Infrastructure's earnings presentation, Nov 12, 2014
Slide 1: Building for Tomorrow: Q3 2014 Results Presentation
BUILDING FOR TOMORROW Q3 2014 Results Presentation November 12, 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: Q3 2014 Snapshot
Q3 2014 Snapshot Strong overall performance in quarter & year to date ► Utilities ⁻ Bristol Water results generally tracking to similar trajectory based on higher rates and positive foreign exchange impact ⁻ Värmevärden had a good operating quarter; new price regime being implemented ► Power ￚ Sound
Slide 4: Q3 2014 Snapshot: Financial Highlights
Q3 2014 Snapshot Financial Highlights Revenue Adjusted EBITDA1 AFFO1 +16.4% +25.3% +43.9% 350 40 120 300 35 100 30 In $ millions In $ millions In $ millions 250 +13.9% 80 25 200 +22.5% 20 60 150 15 100 40 +61.9% 10 50 20 5 0 0 0 Q3 2013 Q3 2014 YTD 2013 YTD 2014 Q3 2013 Q3 2014 YTD 2013 YTD 2014 Q3
Slide 5: Q3 Financial Performance
Q3 Financial Performance In millions of Canadian dollars Quarter Ended Sept 30 Variance Nine Months Ended Sept 30 Variance or on a per share basis unless otherwise noted 2014 2013 (%) 2014 2013 % Revenue 104.1 91.4 13.9 324.9 279.2 16.4 Net income 6.8 20.7 (66.9) 34.7 51.2 (32.2) Adjusted EBITDA1,2
Slide 6: Adjusted EBITDA
Adjusted EBITDA* Variance in AFFO Drivers of Adjusted EBITDA Variance ► Expanded operating +25.3% wind power portfolio 120 ► Higher contracted rates at Cardinal 100 ► Positive foreign currency exchange 80 impact & higher In $ millions revenue at Bristol 60 +22.5% Water ► Offset by higher 40 staffing
Slide 7: Adjusted Funds from Operations
Adjusted Funds from Operations* Drivers of AFFO Variance ► Higher Adjusted 40 +43.9% EBITDA 35 ► Partially offset by higher debt service 30 & maintenance capex due to 25 expanded power 20 portfolio; corporate In $ millions taxes 15 +61.9% 10 5 0 Q3 2013 Q3 2014 YTD 2013 YTD 2014 * Please refer to sl
Slide 8: Transforming Cardinal
Transforming Cardinal Cycling conversion project ► Deployed $8.2 million of the $30 million major maintenance, retrofitting and life extension project ► Preparing for the start of the new contract and operations as a dispatchable facility in 2015 ► Establishing processes to ensure profitable market
Slide 9: Proven Execution Skill
Proven Execution Skill Hitting Development Milestones ► 9.5 MW Skyway 8 project in Ontario ⁻ Achieved commercial operations on Aug 14 ► 24 MW Saint-Philémon project in Québec ￚ Project proceeding as planned ￚ Expected COD in Q1 2015 ► 25 MW Goulais project in Ontario ￚ $76 million financing closed S
Slide 10: Financial Overview: Revenue
Financial Overview Revenue Drivers of Revenue Variance +16.4% 350 300 250 200 In $ millions +13.9% 150 ► Increase in wind power production 100 ► Revenue growth at Bristol Water arising from higher regulated water rates & increased water 50 consumption 0 ► Favourable foreign currency translation at Q
Slide 11: Financial Overview: Expenses
Financial Overview Expenses* Drivers of Expense Variance 200 +8.2% 180 160 140 120 In $ millions 100 80 +5.9% ► Foreign currency translation and higher operating expenses at Bristol Water due to maintenance 60 activities 40 ► Expanded wind power portfolio 20 ► Higher administrative expenses 0 ► Part
Slide 12: Cash Resources
Cash Resources As at Sept 30 As at Dec 31 (in millions of Canadian dollars unless otherwise noted) 2014 2013 Power 26.0 29.0 Utilities- Water 6.7 9.1 Corporate 26.2 7.6 Unrestricted cash & cash equivalents 58.9 45.7 Less: cash with access limitations Power (15.6) (18.1) Utilities – Water1 (6.7) (9.1
Slide 13: Debt Profile
Debt Profile Capital structure aligned to cash flow profile of businesses Long-Term Debt Maturity Profile In Compliance with all Covenants1 Sept 30, Covenant 2014 Amherstburg DSCR Min 1.15x 1.46x Hydros Senior Bonds – DSCR Min 1.2x 1.64x Subordinated bonds - DSCR Min 1.05x 1.98x Erie Shores DSCR Min
Slide 14: 2014 Outlook
2014 Outlook1 ►Expect Expect Lower Adjusted Adjusted EBITDA EBITDA in 2014Contribution 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 15: Priorities in 2014: Organic Growth
Priorities in 2014 Organic Growth ► Focus on PR14 process at Bristol Water ► Build out near-term wind projects by end of Q2 2015 ► Mid-term projects moving through permitting process Maximize Performance of Existing Businesses ► Preventive & predictive maintenance, planning for capital expenditures
Slide 16: Priorities in 2014: Acquisitions and New Development
Priorities in 2014 Evaluate Acquisitions & New Development Opportunities ► Sharpened focus on public-private partnerships during past year ► Actively evaluating select acquisition opportunities ► Building on Capstone Power Development’s efforts & relationships ̅ Recently named as a Qualified Applica
Slide 17: Priorities in 2014: Growth Initiatives
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 18: Strong Fundamentals
Strong Fundamentals High quality, diversified portfolio delivering strong performance Investments in perpetual utilities expected to generate growing cash flow Solid balance sheet New development pipeline and proven execution skills Experienced team with strong relationships across the infrastructur
Slide 19: Appendix
CAPSTONE INFRASTRUCTURE
Slide 20: Power Segment Performance: Seasonality
Power Segment Performance Seasonality Actual Actual Average long-term production (GWh) (1) Type PPA Expiry Q3 2014 Q3 2013 Q1 Q2 Q3 Q4 Annual Gas(2) 2034 184.2 292.2 341.8 272.6 290.5 334.1 1,239.0 Wind(3) 2020 - 2037 77.5 30.5 140.7 90.4 74.4 135.9 441.4 Biomass(3) 2014 50.7 52.0 50.2 45.6 50.4 49.
Slide 21: Power Segment Performance
Power Segment Performance For the quarter ended Sept 30, 2014 (in millions of Canadian dollars Gas Wind1 Biomass1 Hydro Solar Development Total unless otherwise noted) Power generated (GWh) 184.2 77.5 50.7 24.0 12.6 n/a 349.0 Capacity factor (%) 59.5 14.2 99.9 30.4 28.5 n/a n.m.f. Availability (%) 9
Slide 22: Utilities Segment Performance: Bristol Water
Utilities Segment Performance Bristol Water Quarter Ended Sept 30 Variance (in millions of Canadian dollars unless otherwise noted) 2014 2013 (%) Water supplied (megalitres) 21,745 21,820 (0.3) Revenue 61.2 51.0 20.1 Adjusted EBITDA before non-controlling interest 31.2 25.3 23.6 Adjusted EBITDA 15.6
Slide 23: Utilities Segment Performance: Värmevärden
Utilities Segment Performance Värmevärden Quarter Ended Sept 30 Variance (in millions of Canadian dollars unless otherwise noted) 2014 2013 (%) Heat production (GWh) 126 127 (0.8) Interest income 0.7 0.7 - Adjusted EBITDA & AFFO1 0.7 0.7 - 1 – Värmevärden’s contribution to Capstone’s AFFO consists o
Slide 24: 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 25: 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 26: 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 27: Additional Details
Additional Details Glossary Investor Information AMP Quick Facts As at Sept Asset management plan, which is developed by water utilities in the UK 30, 2014 every five years & approved by Ofwat. Common shares outstanding 93,446,640 (TSX:CSE) Annual long-term average production (LTA) An average produc
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