Maxim Power Corp.
TSX : MXG

Maxim Power Corp.

August 11, 2011 18:33 ET

Maxim Power Corp. Announces Second Quarter 2011 Financial and Operating Results

CALGARY, ALBERTA--(Marketwire - Aug. 11, 2011) - Maxim Power Corp. ("MAXIM" or the "Corporation") (TSX:MXG) announced today the release of financial and operating results for its second quarter ended June 30, 2011. The unaudited financial statements, accompanying notes and Management Discussion and Analysis will be available on SEDAR on August 12, 2011 and on MAXIM's website. All figures reported herein are Canadian dollars unless otherwise stated.

FINANCIAL HIGHLIGHTS
Three Months Ended
June 30
, Six Months Ended
June 30
,
($ in thousands except per share amounts) 2011 2010 2011 2010
Revenue $ 17,844 $ 32,657 $ 72,881 $ 83,432
Adjusted EBITDA (1) (2,199 ) 10,676 13,593 23,237
Net income (loss) (5,475 ) 534 (916 ) 24,774
Per share-basic and diluted $ (0.10 ) $ 0.01 $ (0.02 ) $ 0.46
Funds from (used in) operations (135 ) 7,440 14,177 18,961
Per share-basic and diluted $ (0.00 ) $ 0.14 $ 0.26 $ 0.35
Electricity Deliveries (MWh) 180,535 261,942 572,540 646,577
Net Generation Capacity (MW)(2) 809 773 809 773
Average Alberta Prices ($ per MWh) $ 52.12 $ 80.56 $ 67.73 $ 60.72
Average Milner Realized Electricity Price ($ per MWh) $ 53.70 $ 92.69 $ 64.78 $ 64.05
(1) Select financial information was derived from the unaudited interim consolidated financial statements and is prepared in accordance with Canadian generally accepted accounting principles ("GAAP"), except Adjusted EBITDA and Funds from operations ("FFO"). Adjusted EBITDA is provided to assist management and investors in determining the Corporation's approximate operating cash flows before interest, income taxes, and depreciation and amortization and FFO is provided to assist management and investors in determining the Corporation's cash flows generated by operations before the cash impact of working capital fluctuations. Adjusted EBITDA and FFO do not have any standardized meaning prescribed by Canadian GAAP and may not be comparable to similar measures presented by other companies. Refer to Non-GAAP measures in MAXIM's MD&A for reconciliations between non-GAAP financial measures and comparable measures calculated in accordance with Canadian GAAP.
(2) Generation capacity is manufacturer's nameplate capacity net of minority ownership interests of third parties.

OPERATING RESULTS

Revenue for the second quarter of 2011 decreased $14.8 million or 45% to $17.8 million. Earnings before interest, taxes, depreciation and amortization (refer to Non-IFRS measures - "Adjusted EBITDA" in the MD&A), decreased $12.9 million to ($2.2) million in the second quarter of 2011 from $10.7 million in the same quarter of 2010. MAXIM generated 180,535 MWh in second quarter of 2011 compared to 261,942 MWh for the same quarter in 2010, which is a decrease of 81,407 MWh or 31%. The drop in these performance measures reflects the impact of lower Alberta power prices during the quarter. Adjusted EBITDA and funds from operations decreased by a lesser amount than revenue due to the reduced coal costs associated with Milner's reduced electricity generation.

MAXIM incurred a net loss of $5.5 million during the second quarter of 2011, which reflects a $6.0 million decrease from the $0.5 million in net income earned during the same period of prior year. The decrease in net income is due to the lower revenue noted above and is further reduced by a non-cash unrealized loss on floating for fixed price commodity swaps. Note that prior year net income was reduced by $7.6 million because of a non-recurring impact of an arbitration settlement reached in May 2010.

On a year to date basis, revenue, adjusted EBITDA, and funds from operations have decreased $10.5 million, $9.6 million, and $4.8 million, respectively, when compared to the same period of 2010. The negative impact of low second quarter 2011 Alberta power prices and production volumes across MAXIM's generation portfolio was partially offset by higher Alberta power prices and higher earnings from MAXIM's US Northeast facilities for the first half of the year.

GROWTH INITIATIVES

Mine 14

MAXIM has extracted, and is now testing unoxidized coal in order to prepare detailed metallurgical specifications of the low volatile resource and finalize the wash plant design. Subject to confirmation of satisfactory financing arrangements, construction activities are targeted to commence in September 2011 and MAXIM anticipates that Mine 14 will be fully commissioned and producing coal in 2013. Various options to capitalize/monetize Mine 14 are still under evaluation.

Milner Expansion

On June 30, 2011, the Alberta Utilities Commission ("AUC") issued an interim decision to approve MAXIM's application to construct and operate the 500 MW HR Milner expansion project ("M2"). Subsequently, a party made an application for leave to appeal the interim decision of the AUC. On August 10, 2011, the AUC issued their final decision approving the project and rescinding the interim decision. MAXIM did not consider that any appeal of the interim decision would have merit and intends to oppose any application for leave to be granted for the final decision.

Deerland Peaking Station

MAXIM received all required regulatory approvals to construct and operate the Deerland Peaking Station which is a 190 MW natural gas-fired peaking facility that will be located in Bruderheim, Alberta, immediately adjacent to the existing Deerland high voltage substation in Alberta's Industrial Heartland. This area is expected to experience significant growth in electrical demand.

Subject to satisfactory electricity market conditions and conclusion of commercial arrangements necessary to support the investment, MAXIM will initiate construction of this shovel-ready project.

Buffalo Atlee

The Buffalo Atlee Power Project, situated near Brooks, Alberta, has the potential for over 200 MW of wind generation capacity. Wind data has been collected on the 22,000 acre project site for 5 years. MAXIM holds an exploratory Crown land permit with a term of five years, expiring on January 1, 2016. The addition of wind generation to MAXIM's existing portfolio of assets would diversify MAXIM's generation fuel types.

CONFERENCE CALL FOR Q2 2011 RESULTS

MAXIM will host a conference call for analysts and investors on August 23, 2011 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 (877) 240-9772 or (416) 340-8527 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 August 23, 2011 until September 6, 2011 at 9:59 p.m. MDT (11:59 p.m. ET). To access this replay, please dial (800) 408-3053 or (905) 694-9451 followed by the passcode 1006485. In addition, the recording will be available commencing August 24, 2011 in the Investor Relations section of MAXIM's website.

About MAXIM

Based in Calgary, Alberta, MAXIM is an Independent Power Producer ("IPP") engaged in the acquisition and development, ownership and operation of power generation facilities and the resultant sale of generating capacity, electricity and thermal energy. 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

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