CALGARY, ALBERTA--(Marketwire - Feb. 27, 2013) -
- Adjusted fleet availability was in line with our annual target of 89 to 90 per cent at 89.4 per cent for the quarter and 90.0(1) per cent for the year
- Comparable EBITDA(2,3,4) increased to $310 million for the quarter, up $43 million from the same period in 2011 driven by solid results from generation and a full quarter contribution from the Solomon acquisition; Comparable EBITDA for the full year was $1,014 million
- Operations Maintenance and Administration ("OM&A") declined 10 per cent year over year, or $52 million, compared to our target reduction of 5 per cent
- Energy Trading delivered $13 million of gross margin in the fourth quarter, and $3 million for the year
- Funds From Operations(3,4) increased to $205 million for the quarter, up $16 million from the same period in 2011; Funds From Operations for the full year were $776 million
TransAlta Corporation ("TransAlta") (TSX:TA) (NYSE:TAC) today reported 2012 fourth quarter comparable earnings of $54 million ($0.21 per share), up from $29 million ($0.13 per share) in the fourth quarter of 2011. Net earnings attributable to common shareholders for the fourth quarter of 2012 were $38 million ($0.15 per share).
The increase in comparable earnings for 2012 was driven by strong fleet availability, the addition of the Solomon acquisition and lower OM&A costs, partially offset by higher planned outages at the Alberta coal Power Purchase Arrangement ("PPA") facilities, Genesee Unit 3 and lower Energy Trading results. Fourth quarter 2012 net earnings were lower than comparable earnings primarily due to the impact of de-designation of hedges and corporate realignment charges incurred to reposition TransAlta for strategic growth.
"TransAlta's fourth quarter has shown promising gains," said Dawn Farrell, TransAlta President and CEO. "This return to more normalized results is a positive step in the right direction and a good starting point for 2013. 2012 marked a year of substantial progress for TransAlta. We have stayed the course and completed what we said we would do, including setting the fleet up for end of life and realigning the company to ensure continuous focus on operational excellence and growth. These efforts will carry forward into the future and are expected to reduce costs by approximately $25 to $30 million on an annualized basis by the end of 2013."
(1) Adjusted for economic dispatching at Centralia.
(2) EBITDA refers to Earnings before interest, taxes, depreciation and amortization.
(3) Comparable earnings (loss), comparable earnings (loss) per share, comparable EBITDA, and funds from operations, are not defined under International Financial Reporting Standards ("IFRS"). Presenting these measures from period to period provides supplemental information to help management and shareholders evaluate earnings' trends in comparison with prior periods' results. Refer to the Non-IFRS Measures section of the Management's Discussion and Analysis ("MD&A") for further discussion of these items, including, where applicable, reconciliations to net earnings (loss) attributable to common shareholders, operating income (loss), and cash flow from operating activities.
(4) Comparable EBITDA and funds from operations are key supplemental performance measures for TransAlta which provide additional information regarding the company's ability to cover its capital requirements and dividends as well as strengthen its balance sheet and finance growth.
Consistent strength maintained in Generation performance
Fleet availability for the quarter remained strong at 89.4 per cent compared to 90.3 per cent in the fourth quarter of 2011. The marginal decrease in availability is primarily attributable to higher planned outages at the Alberta coal PPA facilities and Genesee Unit 3, partially offset by lower unplanned outages at the Alberta coal PPA facilities and Genesee Unit 3.
Improvement in EBITDA and cash flow in the quarter
Comparable EBITDA improved $43 million in the fourth quarter to $310 million, compared to $267 million for the same period in 2011. Funds from operations increased $16 million in the fourth quarter to $205 million, compared to $189 million for the same period in 2011. These increases were driven by solid results in Generation, the addition of Solomon to the fleet, and lower OM&A costs, which more than offset lower trading margins.
TRANSALTA 2012 FULL YEAR RESULTS
TransAlta reported full year comparable earnings of $118 million ($0.50 per share) versus $230 million ($1.04 per share) in 2011. Comparable results for the year were driven by strong availability across the fleet, but were more than offset by significantly lower Energy Trading gross margins, which were down $134 million from 2011, as well as higher planned outages at the Alberta coal PPA facilities and Genesee Unit 3.
The net loss attributable to common shareholders for the year was $614 million ($2.61 per share) compared to net earnings of $290 million ($1.31 per share) in 2011. This loss is largely due to asset impairment charges of $226 million incurred from writing down the carrying value of the Centralia Plant under IFRS, a write off of $169 million of deferred tax assets, and the one-time impact of $189 million based on the Alberta arbitration panel's decision on Sundance Units 1 and 2, outlined in our press release of July 23, 2012.
Strong Generation performance; TransAlta delivers on its fleet availability goal of 89 - 90 per cent for the year
Adjusted fleet availability for the full year was 90.0 per cent, up from 88.2 per cent in 2011, in spite of six major planned coal outages to complete the three-year investment program. Adjusted fleet availability increased as a result of lower planned and unplanned outages at the Centralia Plant and lower unplanned outages at the Alberta coal PPA facilities and at Genesee Unit 3, partially offset by higher planned outages at the Alberta coal PPA facilities and Genesee Unit 3.
TransAlta maintains stable cash flow for the year
Funds from operations for the year were $776 million versus $809 million in 2011, down due to lower cash earnings which can be largely attributed to the decrease in Energy Trading gross margins, partially offset by an increase in Generation gross margins, after excluding the impact of the Sundance Units 1 and 2 arbitration from earnings.
Highlights - 2012
- Comparable EBITDA of $1,014 million
- Funds from operations of $776 million or $3.30 per share
- Comparable earnings of $118 million or $0.50 per share
- Dividends paid of $1.16 per share to common shareholders
- Approximately 70 per cent participation in our dividend reinvestment plan, resulting in an estimated annualized cash savings of approximately $210 million
- Coal: Comparable gross margins from TransAlta's coal fleet increased $20 million year-over-year despite higher planned outages
- Gas: Comparable gross margins from TransAlta's gas fleet increased $21 million year-over-year as a result of strong availability and reduced gas input costs
- Renewables: Comparable gross margins increased $4 million year-over-year primarily due to strong hydro generation outpacing lower prices in Alberta and lower wind volumes in Western and Eastern Canada
- Energy Trading: Gross margins decreased $134 million year-over-year due to unfavorable market conditions relative to trading positions held
- TransAlta completed its three-year intensive major maintenance program for its coal fleet. Completion of this capital investment program sets up these coal units to operate to end of life
- Acquisition of the 125 megawatt ("MW") dual-fuel Solomon power station for U.S. $318 million, which is fully contracted with Fortescue Metals Group Ltd
- TransAlta and MidAmerican Energy Holdings Company entered into a new strategic partnership through which the two companies will work together to develop, build, and operate new natural gas-fired electricity generation projects in Canada
- Construction of the 68 MW contracted New Richmond wind farm in Quebec is on track to be commissioned in the first quarter of 2013
- Realignment of resources as part of an ongoing strategy to continuously improve operational excellence and accelerate growth, resulting in $25 - $30 million cost savings per year by the end of 2013
Sundance Unit 3
On November 23, 2012, TransAlta reported that the independent arbitration panel granted TransAlta force majeure relief for derates and outages in 2012 and 2011 related to the mechanical failure of critical generator components on Sundance Unit 3. This decision validates that the mechanical failure was beyond TransAlta's reasonable control.
Federal Greenhouse gas regulations
As a result of amendments to Canadian federal regulations requiring coal-fired plants be shut down after a maximum of 50 years of operation, TransAlta has reviewed the useful lives of the Alberta coal generating facilities and related coal mining assets, and where permitted under the regulations, extended the useful lives to a maximum of 50 years.
Sundance Units 1 and 2
On July 23, 2012, TransAlta reported the independent arbitration panel considering TransAlta's decision in December 2010 to shut down two units at its Sundance generating station had allowed the company's claim of force majeure. This decision validates TransAlta's belief the units failed due to issues beyond its control.
TransAlta also sought to have the PPA terminated for economic reasons, as provided for under the legislation. The panel did not agree with this claim. The cost to repair the units is estimated at approximately $190 million. This investment is expected to start generating cash flow in the fourth quarter of 2013.
Net penalties of $189 million from the arbitration panel's decision were recorded in the second quarter of 2012. Additionally, TransAlta wrote down its Sundance Units 1 and 2 by $43 million in the second quarter. This impairment was reversed by $41 million in the third quarter as a result of additional years of merchant operations expected to be realized due to the amendments to Canadian federal regulations.
TransAlta files year end disclosure documents
TransAlta also announced today it has filed its Annual Information Form, Audited Consolidated Financial Statements and accompanying notes, as well as the MD&A. These documents are available through TransAlta's website at www.transalta.com or through Sedar at www.sedar.com.
TransAlta has also filed its 40-F with the U.S. Securities and Exchange Commission. The form is available through their website at www.sec.gov. Paper copies of all documents are available to shareholders free of charge upon request.
A complete copy of TransAlta's fourth quarter extended news release is available in the Investors Centre section of our website: www.transalta.com.
TransAlta will hold a conference call and live webcast and presentation at 9 a.m. MT (11 a.m. ET) today to discuss results. The call will begin with a short address by Dawn Farrell, President and CEO, and Brett Gellner, Chief Financial Officer, followed by a question and answer period for investment analysts, investors, and other interested parties. A question and answer period for the media will immediately follow.
Please contact the conference operator five minutes prior to the call, noting "TransAlta Corporation" as the company and "Brent Ward" as moderator.
Fourth Quarter and 12 Months Ended Dec. 31 2012 Highlights:
|In millions, unless otherwise stated
||3 months ended Dec. 31, 2012
||3 months ended Dec. 31, 2011
||12 months ended Dec. 31, 2012
||12 months ended Dec. 31, 2011
|Availability adjusted for Centralia (%)
|Net earnings (loss) attributable to common shareholders
|Basic and diluted earnings (loss) per common share
|Comparable earnings per share(2)
|Funds from operations(2)
|Funds from operations per share(2)
|Cash flow from operations
(1) Gross margin and operating income are Additional IFRS measures. Refer to the Additional IFRS measures section of the MD&A.
(2) Comparable earnings, comparable earnings per share, comparable EBITDA, funds from operations, and funds from operations per share are not defined under IFRS. Refer to the Non-IFRS financial measures section of the MD&A for an explanation and, where applicable, reconciliations to net earnings(loss) attributable to common shareholders, operating income (loss) and cash flow from operating activities.
Toll-free North American participants call: 1-800-319-4610
Outside of Canada & USA call: 1-604-638-5340
A link to the live webcast will be available on the Investor Centre section of TransAlta's website at http://www.transalta.com/investor-centre/events-presentations/webcasts-conference-calls. If you are unable to participate in the call, the instant replay is accessible at 1-604-638-9010 with TransAlta pass code 2231 followed by the # sign. A transcript of the broadcast will be posted on TransAlta's website once it becomes available.
Note: If using a hands-free phone, lift the handset and press one to ask a question.
TransAlta is a power generation and wholesale marketing company focused on creating long-term shareholder value. TransAlta maintains a low-to-moderate risk profile by operating a highly contracted portfolio of assets in Canada, the United States and Australia. TransAlta's focus is to efficiently operate geothermal, wind, hydro, natural gas and coal facilities in order to provide customers with a reliable, low-cost source of power. For over 100 years, TransAlta has been a responsible operator and a proud contributor to the communities in which it works and lives. TransAlta has been selected by Jantzi-Sustainalytics as one of Canada's Top 50 Socially Responsible Companies since 2009 and is recognized globally for its leadership on sustainability and corporate responsibility standards by FTSE4Good. TransAlta is Canada's largest investor-owned renewable energy provider.
This news release may contain forward looking statements, including statements regarding the business and anticipated financial performance of TransAlta Corporation. These statements are based on TransAlta Corporation's belief and assumptions based on information available at the time the assumption was made. These statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include legislative or regulatory developments, competition, global capital markets activity, changes in prevailing interest rates, currency exchange rates, inflation levels and general economic conditions in geographic areas where TransAlta Corporation operates.
Note: All financial figures are in Canadian dollars unless noted otherwise.