First Quarter 2020 Highlights
- Generated
$109 million or$0.39 per share of free cash flow ("FCF") in the quarter compared to$95 million or$0.33 per share of FCF for the same period in 2019, an 18 per cent increase per share; - Adjusted availability was 92.8 per cent compared to 89.4 per cent for the same period in 2019;
- Our partners on the Sheerness joint venture plant completed a planned outage to convert one of the units to have dual-fuel capabilities;
- Entered into a Letter of Intent to sell the Pioneer Pipeline to
NOVA Gas Transmission Ltd. ("NGTL"), a wholly-owned subsidiary of TC Energy, for a purchase price of$255 million ; - Announced the acquisition of a 29 MW contracted cogeneration asset located in
Michigan from two private companies for a purchase price of approximatelyUS$27 million ; - Advanced our Clean Energy Investment Plan by starting construction on the WindCharger battery project which is expected to reach commercial operation in
July 2020 ; - Returned
$9 million of capital to shareholders in the first quarter through the repurchase and cancellation of 1,297,000 common shares at an average price of$6.73 per share through our normal course issuer bid ("NCIB") program; - Received regulatory approval from the
Alberta Utilities Commission ("AUC") for the repowering of Sundance Unit 5 and Keephills Unit 1 into combined cycle units; and - Successfully implemented our business continuity plan in response to the COVID-19 pandemic which ensured continued essential services to our customers and communities, and safeguarded the health and safety of our employees and contractors.
Subsequent Events
- Commenced construction on the Windrise wind farm in April. We now expect the project to be fully commissioned for second half of 2021 due to a delay in the manufacturing of turbines from one of our suppliers due to COVID-19 pandemic; and
- Held
TransAlta's first virtual Annual and Special Meeting of Shareholders (the "Meeting") in which all Board nominees were elected and all resolutions passed. Upon his re-election,John Dielwart was appointed as Chair of the Board, replacing AmbassadorGordon Giffin who announced his retirement from the Board inJanuary 2019 .
Comparable EBITDA for the three months ended
Operations, maintenance and administration ("OM&A") expense for the three months ended
Free cash flow(1) ("FCF"), one of the Company's key financial metrics, totalled
"First quarter results were strong amidst an unprecedented pandemic in which the company reacted quickly and efficiently to ensure the essential power demands of our communities and customers were uninterrupted and everyone remained healthy," said
"Thank you to all employees, contractors and their families whose exceptional efforts ensure the continued strong operational performance of the company," added
COVID-19 Response
The Company formally implemented its business continuity plan on
Currently, all of our facilities remain fully operational and capable of meeting our customers' needs. We have modified our operating procedures and implemented restrictions to non-essential access to our facilities to support continued operations through the pandemic. The Corporation continues to work and serve all of our customers and counterparties under the terms of their contracts. We have not experienced interruptions to service requirements. Electricity and steam supply continue to remain a critical service requirement to all of our customers and have been deemed an essential service in our jurisdictions.
Our growth construction programs are underway and progressing forward under our business continuity health measures. We are on-track to complete the conversion of Sundance Unit 6 during the second half of 2020. The Company continues to advance conversion of its Keephills Unit 2 and Unit 3 in 2021, but these projects could be delayed by two to three months due to delays in procuring certain equipment as a result of COVID-19.
The Company continues to maintain a strong financial position in part due to our long-term contracts and hedged positions. The Company is scheduled to receive
In addition, the Company has 74 per cent of its
First Quarter 2020 Segmented Review | 3 Months Ended | |
Canadian Coal | 44 | 63 |
33 | (10) | |
29 | 30 | |
30 | 30 | |
Wind and Solar | 74 | 69 |
Hydro | 26 | 27 |
Energy Marketing | 13 | 19 |
Corporate | (29) | (7) |
Total Comparable EBITDA(2) | 220 | 221 |
- Canadian Coal: Comparable EBITDA for the three months ended
March 31, 2020 , decreased$19 million compared to the same period in 2019. This largely reflects lower merchant production and associated revenue primarily due to the planned dual-fuel conversion outage at Sheerness, lower contract production as a result of curtailments and lower merchant production in the coal fleet resulting from additional wind resources supplying power to the market and lower demand resulting from COVID-19 and reduced oil production in the province in March. U.S. Coal : Comparable EBITDA returned to more normalized levels in the three months endedMarch 31, 2020 , increasing by$43 million compared to the same period in 2019, primarily due to the impacts of an isolated and extreme pricing event inMarch 2019 during whichCentralia was unable to commit one of its units to physical production for day-ahead supply due to an unplanned forced outage repair. In addition, comparable EBITDA in the first quarter of 2020 benefited from the strengthening of the US dollar relative to the Canadian dollar.Canadian Gas : Comparable EBITDA for the three months endedMarch 31, 2020 , was consistent with the same period in 2019, which was in line with expectations as the impact of lower merchant production and revenue atSarnia was largely offset by lower fuel costs. Due to the nature of our contracts, changes in production do not have a significant financial impact as our contracts are structured as capacity payments with customer supplied fuel or a passthrough of fuel costs.Australian Gas : Comparable EBITDA for the three months endedMarch 31, 2020 , was consistent with the same period in 2019, as the weakening of the Australian dollar relative to the Canadian dollar was offset by lower costs due to cost-saving initiatives.- Wind and Solar: Comparable EBITDA for the three months ended
March 31, 2020 , increased by$5 million compared with the same period in 2019, primarily due to the timing of environmental attributes sales, higher production, partially offset by lower pricing inAlberta . - Hydro: Comparable EBITDA for the three months ended
March 31, 2020 , was consistent with the same period in 2019, as higher Ancillary Services revenues were offset by lower energy revenues and higher net payments relating to the Alberta Hydro PPA. - Energy Marketing: Comparable EBITDA for the three months ended
March 31, 2020 , decreased by$6 million compared to the same period in 2019, which was in line with expectations as we had particularly strong performance from the US Western desk in the first quarter of 2019. - Corporate: Our Corporate overhead costs for the three months ended
March 31, 2020 , were$29 million , an increase of$22 million compared to$7 million in the same period in 2019, primarily due to realized gains and losses from the total return swap. A portion of the settlement cost of our share-based payment plans is fixed by entering into total return swaps, which are cash settled every quarter. In the three months endedMarch 31, 2020 , we realized a loss of$11 million from the total return swap on our share-based payment plans, whereas in the same period last year we realized a net gain of$13 million .
Consolidated Financial Highlights
Net earnings attributable to common shareholders for the three months ended
Total sustaining capital expenditures of
First Quarter 2020 Highlights
In $CAD millions, unless otherwise stated | 3 Months Ended | |||||
Adjusted availability (%)(3) | 92.8 | % | 89.4 | % | ||
Production (GWh) (3) | 6,486 | 8,125 | ||||
Revenues | $ | 606 | $ | 648 | ||
Fuel, carbon compliance and purchased power | $ | 238 | $ | 366 | ||
Operations, maintenance and administration | $ | 128 | $ | 104 | ||
Net earnings (loss) attributable to common shareholders | $ | 27 | $ | (65) | ||
Cash flow from operating activities | $ | 214 | $ | 82 | ||
Comparable EBITDA(1) | $ | 220 | $ | 221 | ||
Funds from operations(1) | $ | 172 | $ | 169 | ||
Free cash flow(1) | $ | 109 | $ | 95 | ||
Net earnings (loss) per share attributable to common shareholders, basic and diluted | $ | 0.10 | $ | (0.23) | ||
Funds from operations per share(1) | $ | 0.62 | $ | 0.59 | ||
Free cash flow per share(1) | $ | 0.39 | $ | 0.33 | ||
Dividends declared per common share | $ | 0.04 | $ | — | ||
Dividends declared per preferred share(4) | $ | 0.26 | $ | — |
Notes
(1) | These items are not defined under IFRS. Presenting these items from period to period provides management and investors with the ability to evaluate earnings trends more readily in comparison with prior periods' results. Refer to the Comparable EBITDA, Funds from Operations and Free Cash Flow and Earnings and Other Measures on a Comparable Basis sections of the Company's MD&A for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS. |
(2) | Excludes payments associated with finance leases. |
(3) | Availability and production includes all generating assets under generation operations that we operate and finance leases and excludes hydro assets and equity investments. Production includes all generating assets, irrespective of investment vehicle and fuel type. |
(4) | Weighted average of the Series A, B, |
Conference call
First Quarter 2020 Conference Call:
Toll-free North American participants call: 1-888-231-8191
Webcast link: https://produceredition.webcasts.com/starthere.jsp?ei=1306905&tp_key=62df091f51
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Cautionary Statement Regarding Forward Looking Information
This news release contains forward looking statements, including statements regarding the business and anticipated financial performance of the Company that are based on the Company's current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements can be identified by terminology such as "plans", "expects", "proposed", "will", "anticipates", "develop", "continue", and similar expressions suggesting future events or future performance. In particular, this news release contains forward-looking statements, pertaining to, without limitation, the following: the potential impact of COVID-19 on the Company and the actions to be undertaken by the Company in response to the COVID-19 pandemic; entering into an agreement with NGTL for the sale of the Pioneer Pipeline, including the terms and timing thereof; the commercial operation date for the WindCharger battery project; the potential repowering of Sundance Unit 5 and Keephills Unit 1 into combined cycle units; the conversion of Sundance Unit 6 by the second half of 2020; the conversion of Keephills Unit 2 and Unit 3, and the timing thereof; the closing of the
Note: All financial figures are in Canadian dollars unless otherwise indicated.
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