Alterra Power Announces Results for the Quarter Ended March 31, 2014
TSX : AXY
(under IFRS and all amounts in US dollars unless otherwise stated)
VANCOUVER, May 12, 2014 /PRNewswire/ - Alterra Power Corp. (TSX: AXY) ("Alterra" or the "Company") is pleased to report its financial and operating results for the three months ended March 31, 2014. For further information on these results please see Alterra's Unaudited Condensed Consolidated Interim Financial Statements and Management's Discussion and Analysis.
Alterra consolidates 100% of the results of operations at HS Orka and Soda Lake, while Alterra's interests in the Toba Montrose run of river hydro facility and the Dokie 1 wind facility are accounted for as equity investments. In certain statements in this news release, Alterra's results are disclosed as Alterra's "net interest", which means the effective portion of results that Alterra would have reported if each of HS Orka (66.6%), Toba Montrose (40%), Dokie 1 (25.5%), and Soda Lake (100%) had been reported in accordance with Alterra's actual share of ownership at March 31, 2014 and for the three months then ended. Management believes that net interest reporting provides the clearest view of Alterra's performance.
Highlights for the current quarter and subsequent period include:
- Increased Revenue and EBITDA: Consolidated revenue increased by 10% to $18.9 million, and consolidated EBITDA increased by 25% to $7.7 million primarily due to strengthening of the Icelandic Krona, a decrease in seasonal repair costs at Toba Montrose and a decrease in general and administrative expenses. Net interest revenue increased by 8% to $16.0 million and net interest EBITDA increased by 150% to $5.1 million.
- Reliable power generation: Alterra's fleet of power projects generated 262,107 MWh of clean power (net interest), achieving 96% of budgeted generation.
- HS Orka dividend: HS Orka declared a dividend of $2.0 million in the first quarter of 2014. The Company's share is 66.6% which is expected to be received in the second quarter of 2014.
- Jimmie Creek hydro project highlights:
- Partnership update: The Company completed the acquisition of the 49% ownership stake formerly held by an affiliate of GE Energy Financial Services. Subsequent to the quarter, Alterra entered into a new partnership agreement with an affiliate of Fiera Axium Infrastructure, Inc. under which the partners will own 51% and 49% respectively.
- Current activities: Construction activities have begun onsite, including camp, road and bridge construction. Alterra is finalizing terms with project lenders and expects to close project financing later in 2014.
- Shannon wind farm highlights:
- Acquisition completed: Alterra completed the acquisition of 100% of the project on February 13, 2014.
- Interconnection security: Alterra placed a $4.5 million security deposit with the project's transmission service provider, which has begun the design and equipment procurement for the project's interconnection substation.
- Current activities: Alterra is finalizing project contracts (turbine supply, operation and maintenance, etc.), documenting a power hedge for project output, and finalizing terms with lenders and tax equity investors. The Company has also entered into an exclusivity with a large energy infrastructure fund as a potential equity partner for the project.
- Toba Montrose: Subsequent to the quarter, the project settled all insurance matters relating to the 2012 rockslide-related repairs and is finalizing an agreement with its lenders to extinguish the insurance-related waiver.
- Mariposa development project: Alterra and its joint venture partner (Energy Development Corporation (EDC)) performed certain road construction and refurbishment activities in preparation for the drilling program scheduled to begin in late 2015. This phase of project activity was completed subsequent to the quarter end.
- Extension of Peru joint venture with EDC: The Company completed a further joint venture with EDC for the remainder of Alterra's development assets in Peru. EDC obtained a 70% interest in the development asset portfolio and will be funding 100% of the next $6.0 million of development costs, in addition to the $8.0 million of development costs from the previous Peruvian joint venture.
Financial Results
The following table shows Alterra's net interest in selected operating and financial results for the year, in addition to key financial information extracted from the consolidated results.
| For the 3 months ended | HS Orka | Toba Montrose |
Dokie 1 | Soda Lake |
Exploration and Head Office |
Net Interest |
Consolidated | ||||||||
| March 31, 2014 (a) | (66.6 %) | (40%) | (25.5%) | (100%) | Total | Results | |||||||||
| Generation (MWh) | 219,001 | 2,156 | 22,000 | 18,950 | — | 262,107 | 347,780 | ||||||||
| Total Revenue | 11,453 | 230 | 2,489 | 1,830 | — | 16,002 | 18,925 | ||||||||
| Gross Profit (Loss) | 3,758 | (1,650) | 1,425 | 597 | — | 4,130 | 6,239 | ||||||||
| EBITDA (c) | 5,287 | (1,299) | 1,860 | 798 | (1,563) | 5,083 | 7,717 | ||||||||
| For the 3 months ended | HS Orka | Toba Montrose |
Dokie 1 | Soda Lake |
Exploration and Head Office |
Net Interest |
Consolidated | ||||||||
| March 31, 2013 (a) | (66.6%) | (40%) | (25.5%) (b) | (100%) | Total | Results | |||||||||
| Generation (MWh) | 218,652 | 556 | 23,591 | 19,347 | — | 262,146 | 285,737 | ||||||||
| Total Revenue | 10,482 | 64 | 2,810 | 1,445 | — | 14,801 | 17,184 | ||||||||
| Gross Profit (Loss) | 3,497 | (2,785) | 1,596 | (254) | — | 2,054 | 4,997 | ||||||||
| EBITDA (c) | 4,086 | (2,214) | 2,112 | 344 | (2,294) | 2,034 | 6,195 | ||||||||
| (a) | All tabular amounts in the table above are expressed in thousands of US dollars with the exception of generation that is expressed in MWh's. |
| (b) | For comparison purposes, the 2013 operating results shown here for Dokie 1 have been adjusted to show a pro forma 25.5% interest for the comparative quarter (actual ownership during the comparative quarter was 51.0%). |
| (c) | Here and elsewhere, Adjusted EBITDA ("EBITDA") is defined by Alterra as earnings before interest, taxes, foreign exchange, depreciation and amortization, as well as before deductions for change in fair value of bonds payable and derivatives, foreign exchange gain (loss), write off of development costs and goodwill and other income (expense) except business interruption proceeds, amortization of below market contracts, and value assigned to options granted less share of income (loss) of equity accounted investees plus the Company's interest in EBITDA of its equity accounted investees. Alterra discloses EBITDA as it is a measure used by analysts and by management to evaluate Alterra's performance. As EBITDA is a non-IFRS measure, it may not be comparable to EBITDA calculated by others. In addition, as EBITDA is not a substitute for net earnings, readers should consider net earnings in evaluating Alterra's performance. For a reconciliation of consolidated EBITDA to Alterra's consolidated financial statements refer to the Company's Management's Discussion and Analysis for the three months ended March 31, 2014. |
Consolidated Results
Revenue was up 10% at $18.9 million due to the strengthening of the Icelandic Krona and gross profit improved to $6.2 million ($5.0 million at March 31, 2013).
Net loss was $9.7 million, an improvement against the comparative quarter loss ($11.9 million) resulting from strengthening of the Icelandic Krona, a decrease in seasonal repair costs at Toba Montrose, and a reduction in general and administrative expenses as well as certain non-cash items including:
- A $5.7 million non-cash loss resulting from a 14% decrease in projected aluminum prices, which caused a reduction in the value of PPA-related "embedded derivatives" and a modest gain in the fair value of bonds payable ($0.6 million).
- A $3.9 million loss on foreign exchange was recorded, due to unfavorable movements in exchange rates.
Consolidated cash and cash equivalents at March 31, 2014 were $39.9 million ($41.7 million at March 31 31, 2013) of which $36.5 million is held in the Company's Icelandic subsidiary.
Net Interest Results
Alterra's net interest in revenue increased 8% to $16.0 million, and EBITDA increased by 150% to $5.1 million per the improved operating results as described above.
The net interest cash position at March 31, 2014 was $31.6 million.
Operating Results
For the three months ended March 31, 2014, the Company's fleet wide generation was 96% of budget on a net interest basis.
| Generation (MWh) | |||||||||||
| Facility | Q1 2014 Budget | Q1 2014 Actual | Net Interest Budget |
Net Interest Actual | % of Budget | ||||||
| Reykjanes | 206,208 | 197,669 | 137,335 | 131,648 | 96 % | ||||||
| Svartsengi | 125,186 | 131,161 | 83,374 | 87,353 | 105 % | ||||||
| Soda Lake | 19,575 | 18,950 | 19,575 | 18,950 | 97 % | ||||||
| Toba Montrose | 24,354 | 5,390 | 9,742 | 2,156 | 22 % | ||||||
| Dokie 1 | 90,872 | 86,273 | 23,172 | 22,000 | 95 % | ||||||
| TOTAL | 466,195 | 439,443 | 273,198 | 262,107 | 96 % | ||||||
Outlook
John Carson, Alterra's CEO, said, "I'm pleased to report another solid quarter of operations for Alterra, which complements our advancements on the Jimmie Creek and Shannon projects. 2014 will be an important year of growth for the company as we work toward our goal of closing on project financings for both projects later this year."
| Alterra Power will host a conference call to discuss financial and operating results on Tuesday, May 13, 2014 at 11:30 am ET (8:30 am PT). North American participants dial 1-888-390-0546 and International participants dial 1-416-764-8688; the conference ID is 1935649. The call will also be broadcast live on the Internet at http://www.newswire.ca/en/webcast/detail/1343123/1484865 The call will be available for replay for one week after the call by dialing 1-416-764-8677 and entering replay PIN 935649. |
Cautionary Note Regarding Forward-Looking Statements and Information
Certain statements included in this news release may contain information that is forward-looking within the meaning of certain securities laws, including information and statements regarding prospective results of operations, financial position, cash flows or growth potential. These statements are based on factors or assumptions that were applied in drawing a conclusion or making a forecast or projection, including assumptions based on historical trends, current conditions and expected future developments. Since forward-looking statements relate to future events and conditions, by their very nature they require making assumptions and involve inherent risks and uncertainties. Alterra cautions that although it is believed that the assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that actual results may differ materially from the expectations set out in the forward-looking statements. Material risk factors include those set out in the management's discussion and analysis section of Alterra's most recent annual report and quarterly report, and in Alterra's Annual Information Form. Given these risks, undue reliance should not be placed on these forward-looking statements, which apply only as of their dates. Other than as specifically required by law, Alterra undertakes no obligation to update any forward-looking statements or information to reflect new information, subsequent or otherwise.
SOURCE Alterra Power Corp.
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