Transalta Corporation · TSX:TA
Transalta — Investor Presentation (January 2015)
23 slides from Transalta's investor presentation, January 2015
Slide 1: Investor Presentation January 2015
Investor Presentation January 2015 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 • Over 8,500 MW spanning multiple fuels Leading Diversified Power and markets Generation Company • 64 facilities • ~2,200 MW of renewable energy • 100 years of operating history Proven Track Record • Disciplined approach to capital allocation • Highly contracted asset base S
Slide 5: Our Platform
Our Platform • Coal • Canada’s largest publicly traded power 4,930 MW generator & marketer with over 100 years of operating experience • Gas • Diversified asset base with 64 facilities 1,447 MW strategically positioned in Canada, Western U.S. and Western Australia • Wind 1,271 MW 1 • Total fleet cap
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: Recent Strategic Initiatives
Recent Strategic Initiatives • Created TransAlta Renewables Inc. as a competitive growth vehicle • Acquired 144 MW Wind project in Wyoming • Sale of CEGen for US$193.5 million, enhancing the balance sheet for growth • Aligned dividend to the Company’s growth and financial objectives • Reduced debt b
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: TransAlta Renewables
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 installed generating
Slide 10: Hedges Mitigating Impact of Weaker Power Prices
Hedges Mitigating Impact of Weaker Power Prices Total portfolio contractedness Alberta MW • Well hedged through 2015 88% 81% 77% 68% 6,000 • Hedge levels assume normal wind and hydro volatility 5,000 • Positioned for upside from 4,000 mid-term price recovery 3,000 Pacific-Northwest 2,000 • Puget Sou
Slide 11: Financial Review & Outlook
Financial Review & Outlook 11
Slide 12: Performance Highlights
Performance Highlights 3 months ended Sept. 30 2014 9 months ended Sept. 30 2014 (in $CAD millions) 2014 2013 Change 2014 2013 Change Comparable EBITDA $212 $266 $(54) $735 $781 $(46) Funds from Operations $145 $174 $(29) $537 $551 $(14) Free Cash Flow $33 $64 $(31) $191 $235 $(44) Sustaining Capita
Slide 13: Fleet Availability
Fleet Availability Strong availability supported by lower unplanned outages Availability Unplanned Outage Rate Q3 2014 Q3 2013 Q3 2014 Q3 2013 Sundance / Keephills PPA 86.7% 70.2% 11.3% 29.8% Centralia(1) 96.9% 97.6% 3.1% 2.4% Other Coal 95.2% 88.4% 3.9% 2.1% Gas 93.7% 93.1% 4.0% 5.5% Wind 94.6% 92.
Slide 14: 2014 Objectives
2014 Objectives Target Status Financial • EBITDA: $1,015 - $1,065 million $735 million year to date Target revised to $1,005 - $1,025 million • FFO: $743 - $793 million $537 million year to date Target revised to $735 - $755 million • Free Cash Flow: $293 - $343 million $191 million year-to-date Tar
Slide 15: Markets and Growth
Markets and Growth 15
Slide 16: 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 17: Australian Growth Update
Australian Growth Update $650 million of committed capital in two projects South Hedland • EPC contract in place with IHI Engineering Australia to construct plant with Jacob’s Engineering providing support as the owner’s engineer • Relevant work and environmental permits expected to be received in Q
Slide 18: 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 19: Historical Power Prices in Alberta
Historical Power Prices in Alberta Since deregulation, AB Pool prices have averaged $65 / MWh $/MWh $90 $89.95 $80.19 $80 $80.79 $76.22 $71.29 $70.36 $70 $62.99 $66.95 $64.32 $60 $54.59 $50 $50.88 $47.81 $49.42 $43.93 $40 Source: AESO 19
Slide 20: 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 90 SMP 2003 fwds 80 2004 fwds 2005 fwds 20
Slide 21: 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 22: 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 22
Slide 23: 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