Maxim Power Corp.
TSX : MXG

Maxim Power Corp.

November 12, 2008 21:14 ET

Maxim Power Corp. Issues Guidance and Announces Third Quarter 2008 Results

CALGARY, ALBERTA--(Marketwire - Nov. 12, 2008) - Maxim Power Corp. ("MAXIM" or the "Corporation") (TSX:MXG) is pleased to announce its financial and operating results for the third quarter of 2008. The unaudited consolidated financial statements, accompanying notes and MD&A will be filed November 13, 2008 on SEDAR and the documents will also be available on MAXIM's website. All figures reported herein are Canadian dollars unless otherwise stated.



FINANCIAL HIGHLIGHTS

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Three Months Ended Nine Months Ended
September 30 September 30
2008 2007 2008 2007
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($ in thousands except per share
amounts)
Revenue $ 31,042 $ 33,616 $ 93,253 $ 86,580
EBITDA (1) 8,885 15,255 19,139 28,168
Net income 3,790 8,271 3,753 11,386
Per share-basic and diluted $ 0.07 $ 0.19 $ 0.08 $ 0.26
Cash provided by operations 5,355 2,670 14,363 27,550
Per share-basic and diluted $ 0.10 $ 0.06 $ 0.30 $ 0.62

Electricity Deliveries (MWh) 275,297 324,431 666,410 852,929
Net Generation Capacity (MW) (2) 757 492 757 492
Average Alberta Prices ($ per MWh) $ 80 $ 92 $ 88 $ 69

(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 measure section of the
MD&A for an explanation and reconciliation.
(2) Net generation capacity is manufacturer's nameplate capacity net of
minority ownership interests of third parties.


OPERATING RESULTS

During the third quarter 2008, MAXIM completed the acquisitions of the Pittsfield Generating Company LP ("Pittsfield") and its 170 Megawatts ("MW") electric generating facility located in Pittsfield, Massachusetts and the 3.1 MW Beauprau cogeneration facility in France. These acquisitions, coupled with the acquisitions in April, 2008 of the 86 MW Forked River generating facility in New Jersey ("Forked River") and the 7 MW Somal cogeneration plants in France, and the disposition of the 1 MW Gift Lake facility, bring MAXIM's generating capacity to 757 MW at September 30, 2008. The benefit of these acquisitions was offset by certain mechanical issues at the HR Milner Facility ("Milner"). Milner encountered fuel mix ratio and air duct mechanical complications, which resulted in a reduction of revenue, EBITDA and net income. These issues have been resolved and the appropriate operational steps have been taken to mitigate the risk of any reoccurrence.

For the nine months ended September 30, 2008, MAXIM's strong first quarter in 2008 offset the lower operating results in the second and third quarter. Revenues increased $6.7 million from $86.6 million in 2007 to $93.3 million in 2008, primarily due to increased power prices and the acquisition of generating facilities in North America and France. Decreases over the first nine months of 2008 in EBITDA, net income and cash provided by operations were primarily due to the extended duration of the 2008 Milner turnaround during the second quarter and the aforementioned fuel mix and air duct issues during the third quarter. Production for Milner during the first nine months of 2008 totaled 522,067 MWh compared to 684,775 MWh in 2007, reflecting the duration of the outages.

CDECCA CONTRACTS

MAXIM has agreed to indicative terms with the State of Connecticut Department of Public Works for the sale of steam and chilled water from MAXIM's Capitol District Energy Center Cogeneration Associates cogeneration facility. The parties are finalizing definitive agreements which will replace the existing contract for the sale of steam and chilled water to The Energy Networks Inc. The new contract will have a term of ten and one half years.

OUTLOOK

Guidance

MAXIM is issuing guidance for projected 2008 results and preliminary forecast results for 2009. This guidance is based on MAXIM's existing portfolio of assets and therefore does not include the impact of possible acquisitions or commercialization of development initiatives.



Maxim Power Corp. 2009 and 2008 Guidance Provided as at November 12, 2008
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For the year ending For the year ending
($000's, except per share amounts) December 31, 2009 December 31, 2008
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EBITDA 63,000 39,000
Net income 23,000 13,000
Per share - basic and diluted (1) $ 0.42 $ 0.26
Cash provided by operations 45,000 29,000
Per share - basic and diluted (1) $ 0.82 $ 0.57
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(1) Share data per assumptions.


A $1.00/MWh increase in the average Alberta spot electricity price during the fourth quarter of 2008 will increase 2008 EBITDA by $150 thousand and 2008 net income by $90 thousand with corresponding changes to per share amounts. A decrease of $1.00/MWh has the opposite effect on EBITDA, net income, and corresponding per share amounts. A $1.00/MWh increase in the average Alberta spot electricity price during 2009 will increase 2009 EBITDA by $950 thousand and 2009 net income by $618 thousand with corresponding changes to per share amounts. A decrease of $1.00/MWh has the opposite effect on EBITDA, net income, and corresponding per share amounts.

The guidance provided herein is based on the following assumptions.



Maxim Power Corp. 2009 and 2008 Assumptions for Guidance Provided as at
November 12, 2008
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For the year ending For the year ending
($000's, except as otherwise noted) December 31, 2009 December 31, 2008
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Electricity deliveries (MWh) 1,390,000 966,000
Net generation capacity at year
ending (MW) 757 757
Capital expenditures (excluding
acquisitions)
HR Milner 4,000 16,000
Other assets 6,000 6,000
Development projects 2,000 2,000
Average Alberta spot electricity
price $ 82.00 $ 91.00
Average annual foreign exchange rates
C$/USD $ 1.09 $ 1.04
C$/Euro $ 1.60 $ 1.54
Weighted average shares outstanding (000's) 54,574 50,818
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The projected results for 2008 are based on actual results reported to September 30, 2008 by the Corporation and the following assumptions for the fourth quarter of 2008. During the fourth quarter MAXIM anticipates that 50 MW of the HR Milner facility will be sold at a fixed price per MWh to Powerex Corp. and the remaining output of this facility will be sold to the Alberta Electric System Operator at spot market prices. In France, the 2008/2009 cogeneration season which began November 1, 2008, has thirteen of the twenty-two French facilities operating in dispatch mode and nine operating in cogeneration mode. There are no acquisitions assumed to take place in the fourth quarter; however, MAXIM continues its development initiatives related to its Milner expansion project and the Mine #14 project.

The 2009 forecast assumes all sales of HR Milner output at Alberta spot market prices. In France, the cogeneration season ends on March 31, 2009 and a new season begins on November 1, 2009 with thirteen of the French facilities operating in dispatch mode and nine operating in cogeneration mode. There are no acquisitions assumed to take place during 2009 and the Corporation is not exposed to refinancing risk in 2009. MAXIM continues its development initiatives related to its Milner expansion project and the Mine #14 project. In addition, the 2009 forecast assumes turnaround maintenance will occur in the first half of the year at both Milner and CDECCA, and in late fall at Pawtucket. The 2009 Milner turnaround is expected to last one week in 2009, which is significantly shorter than the extended turnaround of eight weeks in 2008.

Normal Course Issuer Bid

MAXIM believes that prevailing market conditions have resulted in its Common Shares being undervalued relative to the immediate and long term value of the Corporation. Further, the acquisition of Common Shares at current market values would represent an appropriate use of MAXIM's cash resources, and such purchases would enhance Shareholder value. Accordingly, MAXIM will continue to purchase Common Shares under its Normal Course Issuer Bid ("NCIB") that commenced on April 2, 2008. Pursuant to the NCIB, the Corporation is authorized to purchase up to 2,220,000 Common Shares and has purchased 256,700 shares to date. Subject to the ability of the Corporation to make one block purchase per calendar week, under the rules of the Toronto Stock Exchange, MAXIM may purchase up to 6,264 Common Shares each trading day. The actual number of Common Shares to be purchased during the remaining term of the NCIB and the timing of any purchases are at the discretion of MAXIM.

GROWTH INITIATIVES

Deerland Peaking Station

In June 2008, MAXIM received regulatory approvals from the Alberta Utilities Commission and Alberta Environment to construct and operate the Deerland Peaking Station, a proposed 190 MW natural gas-fired peaking facility. The station will 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. MAXIM has an option to lease up to 30 acres of land for the station. This is an attractive asset as it provides land for future expansion. MAXIM expects peaking requirements to continue to grow to meet overall demand growth and to provide firm backup for additional intermittent wind resources. Commercial operation for the Deerland Peaking Station is expected to be achieved in 2010, subject to equipment deliveries, electricity market conditions and MAXIM's ability to conclude all commercial arrangements necessary to support construction.

#14 Mine Project

MAXIM has completed and submitted the necessary application materials for the development of three Milner coal leases at the HR Milner site, which represent 13 million tonnes of recoverable coal. The Company is currently waiting for approval of these filings.

Milner Expansion

MAXIM is continuing the preliminary engineering and environmental studies relating to the Milner expansion project. Once completed, the necessary regulatory applications will be completed and submitted to the appropriate regulatory body for approval.

CONFERENCE CALL FOR THE THIRD QUARTER 2008 RESULTS

MAXIM will host a conference call for analysts and investors on Tuesday, November 18, 2008 at 9:00 a.m. MT (11:00 a.m. ET). The call will be hosted by John R. Bobenic, MAXIM's President and Chief Executive Officer, and Michael R. Mayder, MAXIM's Vice President, Finance and Chief Financial Officer.

To participate in this conference call, please dial (866) 542-4265 or (416) 641-6137 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 2:00 p.m. MT (4:00 p.m. ET) on Monday, November 18, 2008 until Tuesday, November 25, 2008 at 9:59 p.m. MT (11:59 p.m. ET). To access this replay, please dial (800) 408-3053 or (416) 695-5800 followed by the passcode 3275177#. In addition, the recording of the call will be available commencing November 19, 2008 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 35 power plants in western Canada, United States and France, having 757 MW of electric and 135 MW of thermal net generating capacity. MAXIM will continue to execute on its strategy as an independent power producer and is targeting significant growth through acquisitions and development of power projects which utilize hydrocarbon based fuels and renewables in the markets of Western Canada, United States and France. 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) 750-9300
    or
    Maxim Power Corp.
    Michael R. Mayder
    Vice President, Finance and CFO
    (403) 750-9311
    Website: www.maximpowercorp.com