PR Newswire
VANCOUVER, March 15, 2017
(under IFRS and all amounts in US dollars unless otherwise stated)
VANCOUVER, March 15, 2017 /PRNewswire/ - Alterra Power Corp. (TSX: AXY) ("Alterra" or the "Company") is pleased to report its financial and operating results for the year ended December 31, 2016. For further information on these results please see Alterra's Consolidated Financial Statements and Management's Discussion and Analysis ("MD&A").
At December 31, 2016, Alterra consolidated 100% of the results of operations from its Icelandic subsidiary HS Orka, while Alterra's interests in the Toba Montrose, Jimmie Creek, Dokie 1, Shannon and Kokomo renewable power projects were accounted for as equity investments. In certain statements in this news release, Alterra's results are disclosed as Alterra's "net interest", by which the Company means the effective portion of operating results that the Company would have reported if each of HS Orka (66.6%), Toba Montrose (40%), Jimmie Creek (51%), Dokie 1 (25.5%), Shannon (50% sponsor equity interest), Kokomo (93.8% sponsor equity interest), and Soda Lake (100% until Soda Lake was sold on January 30, 2015) had been reported in accordance with Alterra's actual share of ownership at December 31, 2016 and for the year then ended. Management believes that net interest reporting, although a non-IFRS measure, provides the clearest view of Alterra's performance. Refer to our MD&A for further information on non-IFRS measures. The Company also has disclosed information below regarding Adjusted EBITDA, another non-IFRS measure. Please refer to the Company's definition of Adjusted EBITDA and further commentary thereto, which is incorporated in the Financial Results table below.
Highlights for the year and subsequent period include:
Financial Results
The following table shows Alterra's net interest in select operating and financial results for the year, in addition to key financial information extracted from the consolidated results.
For the year ended |
HS Orka (66.6)% |
Toba (40%) |
Dokie 1 (25.5%) |
Shannon (50%) |
Jimmie (51%) |
Development |
Net interest |
Consolidated |
Generation (MWh) |
747,544 |
291,779 |
71,258 |
340,039 |
41,514 |
— |
1,492,134 |
1,122,438 |
Total revenue |
40,517 |
22,383 |
6,299 |
6,049 |
4,886 |
— |
80,134 |
60,837 |
Gross profit (loss) |
7,986 |
15,068 |
3,250 |
(2,747) |
3,674 |
— |
27,231 |
11,992 |
Adjusted EBITDA(b) |
18,993 |
17,043 |
4,385 |
998 |
4,135 |
(6,567) |
38,987 |
48,515 |
For the year ended |
HS Orka |
Toba |
Dokie 1 |
Shannon |
Soda |
Development |
Net interest |
Consolidated |
Generation (MWh) |
818,488 |
316,976 |
86,648 |
19,192 |
6,991 |
— |
1,248,295 |
1,235,951 |
Total revenue |
38,219 |
24,738 |
7,906 |
273 |
449 |
— |
71,585 |
57,835 |
Gross profit |
10,632 |
16,915 |
4,368 |
486 |
167 |
— |
32,568 |
16,131 |
Adjusted EBITDA(b) |
18,800 |
18,825 |
5,735 |
35 |
152 |
(6,564) |
36,983 |
46,410 |
(a) |
Here and elsewhere, all tabular amounts (except generation) are expressed in thousands of US dollars. |
(b) |
Here and elsewhere, adjusted EBITDA ("Adjusted EBITDA") is defined by the Company as earnings before interest, taxes, foreign exchange, depreciation and amortization, as well as adjustments for changes in the fair value of holding company bonds (Sweden) and derivatives, write-offs of development costs, other income (expense) except business interruption insurance proceeds, amortization of below market contracts, value assigned to options granted, share of results of equity investments, the Company's proportionate interest in Adjusted EBITDA of its equity investments, research and development costs for deep drilling program and non-recurring items (insurance deductibles, litigation and arbitration costs). Adjusted EBITDA has been calculated on a consistent basis with the comparative year. The Company discloses Adjusted EBITDA as it is a measure used by analysts and by management to evaluate the Company's performance. As Adjusted EBITDA is a non-IFRS measure, it may not be comparable to Adjusted EBITDA calculated by others. In addition, Adjusted EBITDA is not a substitute for net earnings. Readers should consider net earnings in evaluating the Company's performance. For a reconciliation of consolidated Adjusted EBITDA to Alterra's consolidated financial statements refer to the Company's Management's Discussion and Analysis for the year ended December 31, 2016 available on SEDAR at www.sedar.com. |
Consolidated Results
Revenue was $60.8 million for the year, up 5% from the comparative year predominantly due to foreign exchange movements.
The Company recorded a net loss of $1.1 million, an improvement from the comparative year ($17.3 million loss), primarily due to non-cash changes including the fair value of derivatives, foreign exchange and tax expense.
Consolidated cash and cash equivalents at December 31, 2016 was $31.6 million of which $0.3 million is held in the Company's Icelandic subsidiary ($10.3 million and $6.4 million, respectively at December 31, 2015). The increase in consolidated cash was primarily due to funds raised from the October 2016 equity financings and operating earnings, partially offset by development spend and repayment of loans at HS Orka.
The Company's consolidated working capital deficit at December 31, 2016 was $62.3 million compared to a working capital deficit of $123.3 million at December 31, 2015. The working capital deficit was primarily due to a $60.0 million ISK denominated holding company bond being classified as short-term (the bond is set to mature in July) and a $9.8 million developer fee for the Flat Top project, which is expected to be payable at financial close with proceeds from project financing. Excluding these items, the Company would have had a positive working capital balance of $7.5 million at December 31, 2016. The Company has retained an advisor and is currently in refinancing discussions for the ISK denominated holding company bond. Should the Company be unable or elect not to refinance the bond, and returns the shares held as collateral, the Company would own 53.9% of HS Orka and would continue to consolidate its results.
Net Interest Results
Alterra's net interest revenue increased by $8.5 million to $80.1 million primarily due to generation from Shannon and Jimmie Creek, and foreign exchange movements. Net interest Adjusted EBITDA increased 5% to $39.0 million primarily due to earnings from Shannon and Jimmie Creek.
The net interest cash position at December 31, 2016 was $44.4 million.
Operating Results
The Company achieved 92.7% of its budgeted generation for the year (99.6% in 2015), reflecting lower resource availability across the assets in 2016.
2016 Generation (MWh) |
|||||||||
Total |
Net Interest |
||||||||
Facility |
Budget |
Actual |
Budget |
Actual |
% of Budget | ||||
Reykjanes |
667,390 |
606,186 |
444,482 |
403,720 |
90.8% | ||||
Svartsengi |
542,705 |
516,252 |
361,442 |
343,824 |
95.1% | ||||
Toba Montrose |
710,988 |
729,448 |
284,395 |
291,779 |
102.6% | ||||
Jimmie Creek |
74,287 |
81,400 |
37,886 |
41,514 |
109.6% | ||||
Dokie 1 |
331,000 |
279,442 |
84,405 |
71,258 |
84.4% | ||||
Shannon |
794,000 |
680,077 |
397,000 |
340,039 |
85.7% | ||||
TOTAL |
3,120,370 |
2,892,805 |
1,609,610 |
1,492,134 |
92.7% |
|
Outlook
For the 2017 and 2018, management expects the Company to achieve (net interest):
2017 |
2018 | |
Generation (GWh) |
1,595 |
2,046 |
Total revenue |
90,659 |
100,719 |
Adjusted EBITDA |
49,154 |
56,610 |
Outlook notes: | |
1. |
Forecasts 2017 and 2018 generation for hydro, wind and solar projects are based on resource assessments of average annual generation at each project, adjusted for planned maintenance outages. Forecast generation for geothermal facilities is based on budget, assuming the field maintenance work that is currently underway at Reykjanes increases generation to 75 and 85 MW by the end of 2017 and 2018 respectively. The 2017 outlook reflects a full year of generation from the existing eight operating projects. |
2. |
The 2017 projections for revenue and Adjusted EBITDA are based on internal budgets and models for revenue and costs for all operating projects (prepared in accordance with IFRS). Shannon now sells the majority of its power under a long-term hedge; however recently observed lower merchant prices due to low natural gas prices and other factors have been reflected in the revenue and Adjusted EBITDA estimates. Anticipated head office cost and development spend has been included in Adjusted EBITDA and reflects budgeted spend for the year. Blue Lagoon is not included in forecasted revenue. |
3. |
HS Orka projected revenue and Adjusted EBITDA reflects forecasted aluminum prices for a portion of revenue (22.3% in 2016), as well as lower generation in 2017 than 2018, as the anticipated positive impact from the field maintenance work at Reykjanes is not expected to be substantially realized until late 2017 and 2018. Until the Reykjanes field returns to an output of 85 MW, additional power purchases will be necessary to meet demand. Such purchases (and accompanying sales), while still profitable, achieve a lower gross margin than if such sales resulted from power generated by our power plants. |
4. |
The 2018 outlook for revenue and Adjusted EBITDA (other than for HS Orka, discussed above) reflects modest inflation and a full year of operations and earnings from Spartan PV1 (assumed 85% ownership) and Flat Top (assumed 51% ownership) from April 1, 2018. Flat Top assumed to sell the majority of the power produced under a long-term hedge, estimates for revenue reflect latest hedge and merchant pricing observed. |
5. |
Revenue and Adjusted EBITDA projections have been converted from their originating currency at a rate of C$1.34, ISK110 and €0.94 per US dollar for both 2017 and 2018. |
"Though lower resource availability was a headwind for us last year, we were pleased to continue our company growth by commencing operations at Jimmie Creek and completing our first full year at Shannon" said John Carson, Alterra's CEO. "We plan to continue this rapid growth in 2017, as we expect to begin primary construction for Flat Top and other projects and we continue to advance our other development assets."
Alterra will host a conference call to discuss financial and operating results on Thursday, March 16, 2017 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 45402481
The call will also be broadcast live on the Internet at |
The call will be available for replay for one week after the call by dialing 1-416-764-8677 and entering replay PIN 402481# |
Cautionary Note Regarding Forward-Looking Statements and Information
Certain of the statements and information included in this news release constitute forward-looking statements and information within the meaning of applicable securities laws. All statements, other than statements of historical fact, are forward-looking statements or information. This information may involve known and unknown risks, assumptions and uncertainties, and other factors which may cause the Company's actual results, performance or achievements to be materially different from the future results, performance or achievements implied by such statements or information. Specifically, forward-looking statements within this news release relate to, among other things: successful development, financing (including construction debt, tax equity and sponsor interest sales) and construction of our pre-operational projects and properties, Alterra's successful acquisition from or partnership with the owners of projects currently owned by other developers, the success of Alterra's project acquisition, development and expansion programs and greenfield development efforts, all statements regarding the Company's plans and expectations for the declaration of future dividends, including the timing and amount thereof, whether the wind development projects actually or ultimately qualify for all, or a portion of, the production tax credits, prospective generation, results of operations, and financial position, and the information found under the heading "Outlook".
These statements and information reflect the Company's current views with respect to future events and are necessarily based upon a number of assumptions that, while considered reasonable by the Company, are inherently subject to significant operational, business, economic and regulatory uncertainties and contingencies. These assumptions include, among others, the expected power generation from our operations, the success and timely completion of planned development, expansion and construction programs, and modeling and budgeting based on historical trends, whether Alterra's on-site and off-site early-stage construction activities will be sufficient to qualify the wind development projects for the full value of the PTCs; rules, regulation or other guidance may be promulgated pursuant to the Internal Revenue Code of 1986 (as the same may be amended, updated or otherwise modified from time to time) that could jeopardize or otherwise impede the effectiveness of such on-site and off-site early-stage construction activities qualifying such projects for the full value of the PTCs and securing tax equity financing on such basis, our use of proceeds from any equity financings is as currently forecasted, the expected timing for realizing the output capacity of the well, if any, due to the conceptual nature of the deep drilling preliminary output potential, the risk that there has been insufficient testing to define geothermal resource, assumptions concerning temperature and underground fluids, current conditions and expected future developments. Forward-looking statements and information also involve known and unknown risks that may cause actual results to differ materially from those expressed by such statements or information, and the Company has made assumptions and estimates based on or related to many of these factors. These risks include volatility of renewable energy resources, inherent risks in operating and constructing power plants and development programs related to the same, contractual risks related to credit facilities, partnership and power purchase agreements, prospective power, currency and commodity price fluctuations, the implementation of lower corporate tax rates may impede our ability to obtain sufficient amounts of tax equity investment or achieve desired economic returns, successful closing of the acquisition of certain of the wind development projects including without limitation successful completion of due diligence on such projects, negotiation of definitive purchase agreements, satisfaction or waiver of all conditions precedent thereto and the approval of Alterra's Board of Directors, future issuances of equity securities, health, safety, social and environmental risks and risks related to reliance on third parties. Additional risks, assumptions and influential factors are set out in the Company's management discussion analysis and Alterra's most recent annual information form, copies of which are available on SEDAR at www.sedar.com.
Although the Company has attempted to identify important factors that could cause actual results to differ materially, given the inherent uncertainties in such forward-looking statements and information, there may be other factors that cause results not to be as anticipated, estimated, described or intended. Investors are cautioned against undue reliance on any such forward-looking statements or information, 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.
Cautionary Note Regarding Forward-Looking Financial Information
The information provided in the "Outlook" section of this news release constitutes forward-looking financial information within the meaning of applicable securities laws. Management has provided this information as of the date of this news release in order to assist readers to better understand the expected results and impact of the Company's operating and construction projects expected to be commissioned in the near term. Readers are cautioned that this information may not be appropriate for any other purpose, including investment purposes, and consequently, should not place undue reliance on this information. Forward-looking financial information also constitutes forward-looking statements within the context of applicable securities laws and as such, is subject to the same risks, uncertainties and assumptions as are set out above.
SOURCE Alterra Power Corp.