Maxim Power Corp.
TSX : MXG

Maxim Power Corp.

March 24, 2010 20:25 ET

Maxim Power Corp. Announces Record Generation for 2009 and Financial and Operating Results

CALGARY, ALBERTA--(Marketwire - March 24, 2010) - Maxim Power Corp. (TSX:MXG) ("MAXIM" or the "Corporation") announced today the release of financial and operating results for its fourth quarter and year ended December 31, 2009. The audited financial statements, accompanying notes and Management Discussion and Analysis will be available on SEDAR on March 25, 2010 and on MAXIM's website. All figures reported herein are Canadian dollars unless otherwise stated.

FINANCIAL HIGHLIGHTS

  Three Months Ended Twelve Months Ended
  December 31 December 31
($ in thousands except per share amounts) 2009 2008 2009 2008
                 
Revenue $ 41,977 $ 53,429 $ 143,737 $ 146,682
EBITDA (1)   8,177   18,251   33,019   39,387
Net income   505   7,520   2,129   11,312
  Per share basic and diluted $ 0.01 $ 0.15 $ 0.04 $ 0.23
Cash provided by operations   14,902   14,225   38,789   27,177
  Per share basic and diluted $ 0.28 $ 0.26 $ 0.72 $ 0.55
                 
Electricity Deliveries (MWh)   365,221   311,809   1,226,634   1,005,172
Net Generation Capacity (MW) (2)   788   758   788   758
Average Alberta Power Prices ($ per MWh) $ 46 $ 95 $ 48 $ 90
                 
(1)    EBITDA is earnings before interest, taxes, depreciation and amortization and is not a measure under Canadian Generally Accepted Accounting Principles ("GAAP") and may not be comparable to similar measures presented by other companies. Refer to Non-GAAP measures section of the MD&A for an explanation and reconciliation.
 (2)    Generation capacity is manufacturer's nameplate capacity net of minority ownership interests of third parties.

OPERATING RESULTS

MAXIM generated a record 1,226,634 MWh in 2009 compared to 1,005,172 MWh in 2008, which is an increase of 221,462 MWh or 22.0%. Revenue for 2009 decreased $2.9 million or 2.0% to $143.7 million over 2008 revenue of $146.7 million as a result of the lower average Alberta power price realized at HR Milner in 2009 of $51 compared to $86 in 2008. The decrease in average power price was partially offset by a full year of results of the Forked River, Pittsfield, and two cogeneration facilities in France acquired in 2008.

Accordingly, earnings before interest, taxes, depreciation and amortization (refer to Non-GAAP measures - "EBITDA" in the MD&A), decreased $6.4 million to $33.0 million in 2009 from $39.4 million in 2008, net income was $2.1 million compared to 2008 of $11.3 million. Offsetting this was an increase in cash flow from operations of $11.6 million to $38.8 million compared to $27.2 million in 2008 as a result of the change in working capital balances.

During the fourth quarter of 2009, MAXIM generated revenue of $42.0 million compared to $53.4 million for 2008 and EBITDA was $8.2 million compared to $18.3 million in 2008 primarily due to the lower average Alberta power prices. The lower prices were partially offset by total production for the fourth quarter of 365,221 MWh compared to 311,809 MWh in 2008. Milner produced record quarterly generation of 290,737 MWh during the fourth quarter of 2009 compared to 242,601 MWh for the same period in 2008. Alberta power prices averaged $46 per MWh in the fourth quarter of 2009 versus $95 per MWh in the fourth quarter of 2008.

During 2009, MAXIM entered into an arrangement agreement to amalgamate with EarthFirst Canada Inc. ("EarthFirst"). All conditions were satisfied and the amalgamation closed on March 2, 2010, for a total investment of $5.9 million plus closing costs. The amalgamation provides MAXIM with a strategic development opportunity, the Buffalo Atlee Power Project, which has the potential for over 200 MW of wind generation capacity along with $117.4 million in Canadian tax pools related to the power business.

MAXIM's wholly-owned French subsidiary, Comax France SAS ("COMAX"), acquired the Sebi and Chabossiere cogeneration facilities on February 27, 2009 and repowered these facilities for a cost of EUR 6.2 million. These acquisitions subsequent to repowering add an additional 11 MW of electrical capacity and 12 MW of thermal capacity which became operational in November 2009.

During 2009, COMAX entered into several loan and capital lease agreements with French banks for total financing of EUR 15.9 million. At December 31, 2009, EUR 10.2 million had been drawn on the new loans and leases, with funds used to finance the repowering of the Sebi and Chabossiere facilities, acquire and renovate facilities and sites. Undrawn amounts will be used to complete plant renovations during the first half of 2010. Of the new debt, EUR 7.2 million bears interest at the three month EURIBOR plus fees ranging from 2.21% to 2.43%, while the remaining EUR 6.4 million bears interest at fixed rates ranging from 4.40% to 5.10%. Maturity dates on the loans range from 2012 to 2021.

On June 11, MAXIM amended its existing credit agreement with the Bank of Montreal ("BMO"). The amendment provides for term debt financing of $35 million, $28.6 million of which was drawn on closing, a $10.0 million revolving facility for general corporate purposes, and a $3.5 million risk management facility. On September 10, 2009, MAXIM drew the remaining $6.4 million under the term facility in order to support MAXIM's capital requirements.

During 2009, COMAX advanced its initiative to sell electrical generating capacity commencing in 2010. On February 22, 2010, COMAX entered into power purchase agreements ("PPA's") to provide 74 MW of electrical generating capacity to Electricite de France for a term of eight years. This service is being provided through ten distributed generation sites, five of which represent new sites acquired for this purpose and five of which are existing power plants being adapted for this purpose. The total investment is Cdn. $10 million, of which $9.6 million or 96% is being provided by a number of French banks, and the remaining $400 thousand or 4% is being provided by cash on hand. Work will be carried out through the spring of 2010 to reconfigure equipment at certain sites for commercial operations to commence on July 1, 2010.

GROWTH INITIATIVES

Mine 14 Project

MAXIM obtained approval of the Energy Resources Conservation Board ("ERCB") and authorization of the Lieutenant Governor in Council for the permit to develop the Milner No. 14 coal mine and a license to commence commercial operations. Development of the mine is expected to commence once key commercial arrangements necessary to support development have been concluded.

Deerland Peaking Station

As previously announced, MAXIM has received regulatory approvals from the Alberta Utilities Commission and Alberta Environment to construct and operate the Deerland Peaking Station, a 190 MW natural gas-fired peaking facility. The station is to be located immediately adjacent to the existing Deerland high voltage substation in Alberta's industrial heartland, an area expected to experience significant growth in electrical demand. Construction of the facility is expected to take approximately twelve months once the key commercial arrangements necessary to support construction have been concluded. MAXIM anticipates that it will be able to conclude these arrangements with improved market heat rates.

Milner Expansion

In January 2009 MAXIM submitted applications to the Alberta Utilities Commission and Alberta Environment to construct and operate a 500 MW coal-fired generation facility adjacent to its existing Milner facility. The regulatory review process has commenced and is expected to conclude in 2010.

Buffalo Atlee

MAXIM acquired the Buffalo Atlee Power Project ("Buffalo Atlee"), situated near Brooks, Alberta, through an amalgamation with EarthFirst Canada Inc. This project has the potential for development of 200 MW of wind generation capacity. Wind data has been collected on the site for approximately four years and Buffalo Atlee holds an exploratory Crown land permit with a term of four years, expiring on January 1, 2011. MAXIM intends to renew the land permit upon its expiry. The addition of wind generation to MAXIM's existing portfolio of assets will diversify MAXIM's generation fuel types and provides the potential to offset the impact of proposed carbon legislation. MAXIM intends to further investigate the economic feasibility of developing this project following the amalgamation with EarthFirst Canada Inc.

OUTLOOK

2009 Guidance

MAXIM provided updated guidance for its projected 2009 results on November 12, 2009. This guidance was based on MAXIM's existing portfolio of assets and therefore did not include the impact of possible acquisitions or commercialization of development initiatives. The primary driver of differences between guidance and actual results are lower Alberta power prices, which averaged $48 per MWh for 2009 versus the forecast price of $52 per MWh.

Maxim Power Corp. 2009 Guidance and Results

($000's, except per share amounts) Guidance on November 12, 2009 Recorded at December 31, 2009 Difference
EBITDA (refer to non-GAAP measures)   39,000   33,019   (5,981)
Net income   5,900   2,129   (3,771)
  Per share – basic and diluted $ 0.11 $ 0.04 $ (0.07)
Cash provided by operations   34,000   38,789   4,789
  Per share - basic and diluted $ 0.63 $ 0.72 $ 0.09

EBITDA for 2009 was $33.0 million, which is $6.0 million or 15% lower than guidance of $39 million. Lower EBITDA is primarily attributable to lower revenue earned than forecast due to lower than anticipated Alberta power pool prices. Fourth quarter Alberta power prices averaged $46 per MWh compared to the forecast price of $53 per MWh.

MAXIM recorded net income of $2.1 million in 2009, which was $3.8 million lower than guidance of $5.9 million. Lower net income is primarily attributable to lower power prices than anticipated.

Cash provided by operations was $38.8 million or $4.8 million higher than guidance of $34.0 million. Higher cash provided by operations was the result of working capital fluctuations due to collection of accounts receivable partially offset by the decrease in cash inflows related to lower fourth quarter revenue.

The 2009 guidance was based on the following assumptions and is compared to results recorded at December 31, 2009.

Maxim Power Corp. 2009 Assumptions for Guidance and Results

($000's, except as otherwise noted) Guidance on November 12, 2009(1) Recorded at December 31, 2009 Difference
Electricity deliveries (MWh)   1,276,000     1,226,634     (49,366 )
Net generation capacity at year ending (MW)   788     788     -  
Capital expenditures (excluding acquisitions)                  
  HR Milner   8,000     8,516     516  
  Other assets   3,000     3,204     204  
  Development projects   2,000     1,692     (308 )
France facilities – investment and financing                  
  Acquire and repower   24,700     21,698     (3,002 )
  Financing   (23,400 )   (15,871 )   7,529  
  Net France facilities   1,300     5,827     4,527  
Average Alberta spot electricity price $ 52.00   $ 47.85   $ 4.15  
Average annual foreign exchange rates                  
  C$/USD $ 1.15   $ 1.14   $ (0.01 )
  C$/Euro $ 1.50   $ 1.59   $ 0.09  
Weighted average shares outstanding (000's)   54,182     54,181     (1 )

(1) Unchanged from previously updated 2009 guidance provided on August 13, 2009.

2010 Guidance

MAXIM intends to provide 2010 Guidance with the release of its Q1, 2010 results.

CONFERENCE CALL FOR 2009 RESULTS

MAXIM will host a conference call for analysts and investors on Tuesday, March 30, 2010 at 10:00 a.m. MT (12:00 p.m. ET). The call will be hosted by John Bobenic, MAXIM's President and Chief Executive Officer, and by Mike Mayder, Vice President, Finance and Chief Financial Officer. To participate in this conference call, please dial (866) 226-1792 or (416) 340-2216 in the Toronto area. It is recommended that participants call at least ten minutes prior to start time.

A recording of the conference call will be available from 1:00 p.m. MT (3:00 p.m. EDT) on March 30, 2010 until April 6, 2010 at 9:59 p.m. MDT (11:59 p.m. ET). To access this replay, please dial (800) 408-3053 or (416) 695-5800 followed by the passcode 3376050. In addition, the webcast will be available commencing March 31, 2010 in the Investor Relations section of MAXIM's web site at www.maximpowercorp.com.

About MAXIM

Based in Calgary, Alberta, MAXIM is an independent power producer, which acquires or develops, owns and operates innovative and environmentally responsible power projects. MAXIM currently owns and operates 44 power plants in western Canada, United States and France, having 809 MW of electric and 117 MW of thermal net generating capacity. Approximately 80% of MAXIM's current portfolio is comprised of clean burning natural gas, high efficiency cogeneration, waste heat and landfill gas fuelled generation. MAXIM trades on the TSX under the symbol "MXG". For more information about MAXIM, visit our website at www.maximpowercorp.com.

Statements in this release which describe MAXIM's intentions, expectations or predictions, or which relate to matters that are not historical facts are forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties which may cause the actual results, performances or achievements of MAXIM to be materially different from any future results, performances or achievements expressed in or implied by such forward-looking statements. MAXIM may update or revise any forward-looking statements, whether as a result of new information, future events or changing market and business conditions and will update such forward looking statements as required pursuant to applicable securities laws.

Contact Information

  • Maxim Power Corp.
    John R. Bobenic
    President and CEO
    (403) 263-3021
    or
    Maxim Power Corp.
    Michael R. Mayder
    Vice President, Finance and CFO
    (403) 263-3021
    www.maximpowercorp.com