Financial highlights
- In the fourth quarter of 2023, generated:
- adjusted funds from operations (AFFO) of
$162 million and net cash flows used in operating activities of$18 million - adjusted EBITDA of
$313 million and a net income of$95 million
- adjusted funds from operations (AFFO) of
- For 2023, generated:
- AFFO of
$819 million and net cash flows from operating activities of$822 million - adjusted EBITDA of
$1,455 million and a net income of$737 million
- AFFO of
Strategic highlights
- Delivered on our grid-critical natural gas strategy through the acquisition of three contracted, natural gas facilities that are well-positioned in high demand areas of the
U.S. Western Electricity Coordinating Council (WECC) market and support further development opportunities in the region.$1.5 billion (US$1.1 billion ) acquisition of 100% interest in the La Paloma facility inCalifornia and 50% interest in the Harquahala facility inArizona , which received strong institutional support.$129 million (US$97.5 million ) acquisition of 50.15% interest in the Frederickson 1Generating Station inWashington .
- Achieved strong financing results to fund strategic growth and fleetwide optimization and maintenance activities, in support of delivering reliable, affordable and decarbonized power for our customers.
- Completed a
$850 million medium term note (MTN) offering. - Completed a
$400 million subscription receipts offering.
- Completed a
“Over the past year,
“Dispatchable natural gas plays a vital role in our strategy to provide stable energy supply as we build out renewables and advance transformative net zero solutions. We are dedicated to leading a balanced approach to the energy transition with a steadfast focus on delivering reliable, affordable and decarbonized power for our customers,” stated
“In 2023, we achieved record annual adjusted EBITDA of
Operational and Financial Highlights1
(unaudited, $ millions, except per share amounts) | Three months ended | Year ended | ||||||
2023 | 2022 | 2023 | 2022 | |||||
Electricity generation (Gigawatt hours) | 8,692 | 8,049 | 32,487 | 28,573 | ||||
Generation facility availability | 93% | 90% | 95% | 93% | ||||
Revenues and other income | 984 | 929 | 4,282 | 2,929 | ||||
Adjusted EBITDA 2 | 313 | 303 | 1,455 | 1,353 | ||||
Net income (loss) 3 | 95 | (99 | ) | 737 | 128 | |||
Net income (loss) attributable to shareholders of the Company | 97 | (98 | ) | 744 | 138 | |||
Basic earnings (loss) per share ($) | 0.74 | (0.91 | ) | 6.07 | 0.85 | |||
Diluted earnings (loss) per share ($) | 0.74 | (0.91 | ) | 6.04 | 0.84 | |||
Net cash flows (used in) from operating activities | (18 | ) | 42 | 822 | 935 | |||
Adjusted funds from operations 2 | 162 | 140 | 819 | 848 | ||||
Adjusted funds from operations per share ($) 2 | 1.38 | 1.20 | 6.99 | 7.28 | ||||
Purchase of property, plant and equipment and other assets, net | 244 | 179 | 723 | 682 | ||||
Dividends per common share, declared ($) | 0.6150 | 0.5800 | 2.3900 | 2.2550 |
- The operational and financial highlights in this press release should be read in conjunction with the Management’s Discussion and Analysis and the audited consolidated financial statements for the year ended
December 31, 2023 . - Earnings before net finance expense, income tax expense, depreciation and amortization, impairments, foreign exchange gains or losses, finance expense and depreciation expense from joint venture interests, gains or losses on disposals and unrealized changes in fair value of commodity derivatives and emissions credits (adjusted EBITDA) and adjusted funds from operations (AFFO) are used as non-GAAP financial measures by the Company. The Company also uses AFFO per share which is a non-GAAP ratio. These measures and ratios do not have standardized meanings under GAAP and are, therefore, unlikely to be comparable to similar measures used by other enterprises. See Non-GAAP Financial Measures and Ratios.
- Includes depreciation and amortization for the three months ended
December 31, 2023 and 2022 of$142 million and$139 million , respectively, and for the year endedDecember 31, 2023 and 2022 of$574 million and$553 million , respectively. Budgeted depreciation and amortization for 2024 is$121 million per quarter.
Factors impacting results for the fourth quarter of 2023 – For the quarter ended
Significant Events
Acquisition of Frederickson 1
On
Frederickson 1 is a 265 MW natural gas-fired combined-cycle generating facility located in
Frederickson 1 is well-positioned as a flexible and dispatchable resource that provides reliable power in support of the continuing energy transition to renewables in the region.
On
The net proceeds from the Offering were used to partially finance Capital Power’s acquisitions of (i) a 50% interest in
On
Concurrently, the Company issued 2,745,000 subscription receipts (together with the Public Subscription Receipts, the Subscription Receipts) at the Offering Price to
Each Subscription Receipt entitles the holder thereof to receive, without payment of additional consideration or further action, upon the first to close of the acquisitions of La Paloma and Harquahala , one common share of
SUBSEQUENT EVENTS
Acquisition of
On
- 100% of the equity interests in
CXA La Paloma, LLC (La Paloma), which owns the 1,062 MW La Paloma natural gas-fired generation facility inKern County, California (the La Paloma Acquisition); and - under a newly formed 50/50 partnership between
Capital Power Investments, LLC and an affiliate of a fund managed by BlackRock’s Diversified Infrastructure business (BlackRock), 100% of the equity interests inNew Harquahala Generating Company, LLC (Harquahala), which owns the 1,092 MW Harquahala natural gas-fired generation facility inMaricopa County, Arizona (the Harquahala Acquisition and together with the La Paloma Acquisition, the Acquisitions).
Under the newly established 50/50 partnership,
La Paloma and Harquahala are critical infrastructure assets, which support the reliability of
The Acquisitions are expected to generate average annual Adjusted EBITDA of approximately
The purchase price of the Acquisitions attributable to
The La Paloma Acquisition and the Harquahala Acquisition closed on
Updates to Genesee Repowering project schedule
On
Partnered with
On
Pursuant to the agreement, the two companies will examine the feasibility of developing SMRs in
Analyst conference call and webcast
Conference call details will be sent directly to analysts.
An archive of the webcast will be available on the Company’s website at www.capitalpower.com following the conclusion of the analyst conference call.
Non-GAAP Financial Measures and Ratios
These terms are not defined financial measures according to GAAP and do not have standardized meanings prescribed by GAAP and, therefore, are unlikely to be comparable to similar measures used by other enterprises. These measures should not be considered alternatives to net income, net income attributable to shareholders of
Adjusted EBITDA
Commencing with the Company’s
A reconciliation of adjusted EBITDA to net income (loss) is as follows:
(unaudited, $ millions) | Year ended | Three months ended | |||||||||||||||||||||
2023 | 2022 | ||||||||||||||||||||||
Revenues and other income | 4,282 | 2,929 | 984 | 1,150 | 881 | 1,267 | 929 | 786 | 713 | 501 | |||||||||||||
Energy purchases and fuel, other raw materials and operating charges, staff costs and employee benefits expense, and other administrative expense | (2,657 | ) | (2,059 | ) | (694 | ) | (626 | ) | (614 | ) | (723 | ) | (909 | ) | (543 | ) | (429 | ) | (178 | ) | |||
Remove unrealized changes in fair value of commodity derivatives and emission credits included within revenues and energy purchases and fuel | (321 | ) | 429 | (14 | ) | (151 | ) | 23 | (179 | ) | 247 | 136 | 28 | 18 | |||||||||
Remove other non-recurring items 1 | 5 | - | 1 | 4 | - | - | - | - | - | - | |||||||||||||
Adjusted EBITDA from joint ventures 2 | 146 | 54 | 36 | 37 | 37 | 36 | 36 | 4 | 7 | 7 | |||||||||||||
Adjusted EBITDA | 1,455 | 1,353 | 313 | 414 | 327 | 401 | 303 | 383 | 319 | 348 | |||||||||||||
Depreciation and amortization | (574 | ) | (553 | ) | (142 | ) | (148 | ) | (143 | ) | (141 | ) | (139 | ) | (133 | ) | (139 | ) | (142 | ) | |||
Unrealized changes in fair value of commodity derivatives and emission credits | 321 | (429 | ) | 14 | 151 | (23 | ) | 179 | (247 | ) | (136 | ) | (28 | ) | (18 | ) | |||||||
Other non-recurring items 1 | (5 | ) | - | (1 | ) | (4 | ) | - | - | - | - | - | - | ||||||||||
Foreign exchange (losses) gains | (6 | ) | (15 | ) | (2 | ) | (9 | ) | 4 | 1 | 3 | (12 | ) | (7 | ) | 1 | |||||||
Net finance expense | (166 | ) | (156 | ) | (49 | ) | (35 | ) | (34 | ) | (48 | ) | (44 | ) | (40 | ) | (35 | ) | (37 | ) | |||
(Losses) gains on acquisition and disposal transactions | (3 | ) | (37 | ) | (5 | ) | 5 | (3 | ) | - | (33 | ) | (3 | ) | (1 | ) | - | ||||||
Other items2,3 | (81 | ) | (22 | ) | (22 | ) | (19 | ) | (19 | ) | (21 | ) | (17 | ) | (4 | ) | (1 | ) | - | ||||
Income tax (expense) recovery | (204 | ) | (13 | ) | (11 | ) | (83 | ) | (24 | ) | (86 | ) | 75 | (24 | ) | (31 | ) | (33 | ) | ||||
Net income (loss) | 737 | 128 | 95 | 272 | 85 | 285 | (99 | ) | 31 | 77 | 119 | ||||||||||||
Net income (loss) attributable to: | |||||||||||||||||||||||
Non-controlling interests | (7 | ) | (10 | ) | (2 | ) | (2 | ) | (2 | ) | (1 | ) | (1 | ) | (3 | ) | (3 | ) | (3 | ) | |||
Shareholders of the Company | 744 | 138 | 97 | 274 | 87 | 286 | (98 | ) | 34 | 80 | 122 | ||||||||||||
Net income (loss) | 737 | 128 | 95 | 272 | 85 | 285 | (99 | ) | 31 | 77 | 119 |
- For the year ended
December 31, 2023 , other non-recurring items reflects restructuring costs and costs related to the end-of-life of Genesee coal operations of$3 million and$2 million , respectively. For the three months endedDecember 31, 2023 , other non-recurring items reflects costs related to the end-of-life of Genesee coal operations of$1 million . - Total income from joint ventures as per our consolidated statements of income (loss).
- Includes finance expense, depreciation expense and unrealized changes in fair value of derivative instruments from joint ventures.
Adjusted funds from operations and adjusted funds from operations per share
AFFO and AFFO per share are measures of the Company’s ability to generate cash from its operating activities to fund growth capital expenditures, the repayment of debt and the payment of common share dividends.
AFFO represents net cash flows from operating activities adjusted to:
- remove timing impacts of cash receipts and payments that may impact period-to-period comparability which include deductions for net finance expense and current income tax expense, the removal of deductions for interest paid and income taxes paid and removing changes in operating working capital,
- include the Company’s share of the AFFO of its joint venture interests and exclude distributions received from the Company’s joint venture interests which are calculated after the effect of non-operating activity joint venture debt payments,
- include cash from off-coal compensation that will be received annually,
- remove the tax equity financing project investors’ shares of AFFO associated with assets under tax equity financing structures so only the Company’s share is reflected in the overall metric,
- deduct sustaining capital expenditures and preferred share dividends,
- exclude the impact of fair value changes in certain unsettled derivative financial instruments that are charged or credited to the Company’s bank margin account held with a specific exchange counterparty, and
- exclude other typically non-recurring items affecting cash from operations that are not reflective of the long-term performance of the Company’s underlying business.
Commencing with the Company’s
A reconciliation of net cash flows from operating activities to adjusted funds from operations is as follows:
(unaudited, $ millions) | Year ended | Three months ended | |||||||
2023 | 2022 | 2023 | 2022 | ||||||
Net cash flows from operating activities per consolidated statements of cash flows | 822 | 935 | (18 | ) | 42 | ||||
Add (deduct) items included in calculation of net cash flows from operating activities per consolidated statements of cash flows: | |||||||||
Interest paid | 111 | 89 | 8 | 13 | |||||
Realized gains on settlement of hedged interest rate derivatives | (20 | ) | (27 | ) | (10 | ) | - | ||
Change in fair value of derivatives reflected as cash settlement | (249 | ) | 213 | (38 | ) | 153 | |||
Distributions received from joint ventures | (36 | ) | (16 | ) | (11 | ) | (10 | ) | |
Miscellaneous financing charges paid 1 | 13 | 7 | 7 | 2 | |||||
Income taxes paid | 214 | 37 | 178 | 13 | |||||
Change in non-cash operating working capital | 226 | (179 | ) | 100 | (28 | ) | |||
259 | 124 | 234 | 143 | ||||||
Net finance expense 2 | (134 | ) | (111 | ) | (37 | ) | (31 | ) | |
Current income tax expense | (155 | ) | (40 | ) | (20 | ) | (1 | ) | |
Sustaining capital expenditures 3 | (92 | ) | (133 | ) | (20 | ) | (58 | ) | |
Preferred share dividends paid | (32 | ) | (37 | ) | (9 | ) | (8 | ) | |
Cash received for off-coal compensation | 50 | 50 | - | - | |||||
Remove tax equity interests’ respective shares of adjusted funds from operations | (7 | ) | (7 | ) | (2 | ) | 2 | ||
Adjusted funds from operations from joint ventures | 92 | 36 | 22 | 20 | |||||
Other non-recurring items 4 | 16 | 31 | 12 | 31 | |||||
Adjusted funds from operations | 819 | 848 | 162 | 140 | |||||
Weighted average number of common shares outstanding (millions) | 117.1 | 116.5 | 117.4 | 116.9 | |||||
Adjusted funds from operations per share ($) | 6.99 | 7.28 | 1.38 | 1.20 |
- Included in other cash items on the consolidated statements of cash flows to reconcile net income to net cash flows from operating activities.
- Excludes unrealized changes on interest rate derivative contracts, amortization, accretion charges and non-cash implicit interest on tax equity investment structures.
- Includes sustaining capital expenditures net of: (i) partner contributions of
$6 million and$1 million for the year and three months endedDecember 31, 2023 , respectively, compared with$5 million and$1 million for the year and three months endedDecember 31, 2022 , respectively and (ii) insurance recoveries of$3 million for the year endedDecember 31, 2023 . - For the year ended
December 31, 2023 , other non-recurring items reflects restructuring costs of$3 million , costs related to the end-of-life of Genesee coal operations of$8 million and dividend equivalent payments for the subscription receipt offering (see Significant events) of$7 million , net of current income tax expenses of$2 million . For the three months endedDecember 31, 2023 , other non-recurring items reflects costs related to the end-of-life of Genesee coal operations of$7 million and dividend equivalent payments for the subscription receipt offering (see Significant events) of$7 million , net of current income tax expenses of$2 million .
The year and three months endedDecember 31, 2022 , include a write-down of$18 million to reflect lower net realizable value of inventory related to the end-of-life of Genesee coal operations and a provision for the termination fees related to the existing PPAs of the Bear Branch Solar, Hornet Solar and Hunter’s Cove Solar projects.
Forward-looking Information
Forward-looking information or statements included in this press release are provided to inform the Company’s shareholders and potential investors about management’s assessment of Capital Power’s future plans and operations. This information may not be appropriate for other purposes. The forward-looking information in this press release is generally identified by words such as will, anticipate, believe, plan, intend, target, and expect or similar words that suggest future outcomes.
Material forward-looking information in this press release includes disclosures regarding (i) status of the Company’s 2024 AFFO and adjusted EBITDA guidance, (ii) forecasted 2024 depreciation, (iii) the impacts of the IRA on our projects, (iv) the timing of, funding of, generation capacity of, costs of technologies selected for, environmental benefits or commercial and partnership arrangements regarding existing, planned and potential development projects and acquisitions (including the repowering of Genesee 1 and 2 and La Paloma and Harquahala acquisitions), (v) the financial impacts of Frederickson 1
These statements are based on certain assumptions and analyses made by the Company considering its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate including its review of purchased businesses and assets. The material factors and assumptions used to develop these forward-looking statements relate to: (i) electricity, other energy and carbon prices, (ii) performance, (iii) business prospects (including potential re-contracting of facilities) and opportunities including expected growth and capital projects, (iv) status of and impact of policy, legislation and regulations and (v) effective tax rates.
Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results and experience to differ materially from the Company’s expectations. Such material risks and uncertainties are: (i) changes in electricity, natural gas and carbon prices in markets in which the Company operates and the use of derivatives, (ii) regulatory and political environments including changes to environmental, climate, financial reporting, market structure and tax legislation, (iii) disruptions, or price volatility within our supply chains, (iv) generation facility availability, wind capacity factor and performance including maintenance expenditures, (v) ability to fund current and future capital and working capital needs, (vi) acquisitions and developments including timing and costs of regulatory approvals and construction, (vii) changes in the availability of fuel, (viii) ability to realize the anticipated benefits of acquisitions, (ix) limitations inherent in the Company’s review of acquired assets, (x) changes in general economic and competitive conditions and (xi) changes in the performance and cost of technologies and the development of new technologies, new energy efficient products, services and programs. See Risks and Risk Management in the Company’s Integrated Annual Report for the year ended
Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the specified approval date. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.
Territorial Acknowledgement
In the spirit of reconciliation,
About
We prioritize delivering reliable, affordable and decarbonized power that communities can depend on, building decarbonized power systems needed for tomorrow, and creating real net zero solutions for customers. We are powering change by changing power.
For more information, please contact:
Media Relations: (780) 392-5335 kperron@capitalpower.com | Investor Relations: (403) 736-3315 investor@capitalpower.com |
Source:
2024 GlobeNewswire, Inc., source