Maxim Power Corp. (TSX:MXG) ("MAXIM" or the "Corporation")
announced today the release of financial and operating results for
its third quarter ended September 30, 2012. The unaudited financial
statements, accompanying notes and Management Discussion and
Analysis will be available on SEDAR and on MAXIM's website on
November 9, 2012. All figures reported herein are Canadian dollars
unless otherwise stated.
FINANCIAL HIGHLIGHTS
Three Months Ended Nine Months Ended
September 30, September 30,
($ in thousands except
per share amounts) 2012 2011 2012 2011
Net revenue (1) $ 41,620 $ 37,593 $ 105,454 $ 110,474
Adjusted EBITDA (1) 16,612 13,690 25,259 27,523
Adjusted net income (1) 9,765 5,404 9,946 5,973
Net income 8,343 17,787 2,253 16,871
Per share - basic and
diluted $ 0.15 $ 0.33 $ 0.04 $ 0.31
Funds from operations
(2) 16,700 13,618 25,666 27,313
Per share - basic and
diluted $ 0.31 $ 0.24 $ 0.47 $ 0.50
Electricity Deliveries
(MWh) 354,976 335,268 834,992 907,808
Net Generation Capacity
(MW) (3) 788 809 788 809
Average Alberta Power
Prices ($ per MWh) $ 78.09 $ 94.69 $ 59.48 $ 76.26
Average Milner Realized
Electricity Price
($ per MWh) $ 134.70 $ 95.41 $ 87.48 $ 76.91
(1) Select financial information was derived from the unaudited condensed
consolidated interim financial statements and is prepared in accordance with
Part 1 of the Canadian Institute of Chartered Accountants Handbook ("GAAP"),
except net revenue, adjusted EBITDA, and adjusted net income. Net revenue is
provided to highlight revenue net of any gains or losses realized on
commodity swaps. Adjusted EBITDA is provided to assist management and
investors in determining the Corporation's approximate operating cash flows
before interest, income taxes, and depreciation and amortization and certain
other income and expenses, and adjusted net income is used to compare
MAXIM's results among reporting periods without consideration of unrealized
gains and losses and to evaluate MAXIM's performance. Net revenue, adjusted
EBITDA, and adjusted net income do not have any standardized meaning
prescribed by GAAP and may not be comparable to similar measures presented
by other companies.
(2) Funds from operations is an Additional GAAP measure provided to assist
management and investors in determining the Corporation's cash flows
generated by operations before the cash impact of working capital
fluctuations.
(3) Generation capacity is manufacturer's nameplate capacity net of minority
ownership interests of third parties.
OPERATING RESULTS
Net revenue, adjusted EBITDA, and funds from operations
increased in the third quarter of 2012 when compared to the third
quarter of 2011. The increase in these financial measures is
primarily due to higher generation and pricing at MAXIM's
Pittsfield facility in the Northeast US as well as higher realized
prices at Milner due to greater price volatility with Milner
remaining predominantly unhedged to commodity prices in the third
quarter of 2012.
Net income in the third quarter of 2012 was favourably affected
by the aforementioned factors, partially offset by an unrealized
(non-cash) loss on a derivative coal contract in 2012 as compared
to an unrealized gain in 2011.
On a year to date basis, net revenue, adjusted EBITDA, net
income and funds from operations have decreased from the prior
year. The decrease in these financial measures is primarily due to
a decline in Alberta power prices which had led to lower generation
and impacted Milner results. Net income further decreased because
of the previously mentioned unrealized loss on a derivative coal
contract, which was partially offset by a gain from the sale of the
APP facility.
AMENDMENT OF COAL CONTRACT
On November 8, 2012, the Corporation, through a subsidiary,
amended one of its long-term coal supply agreements. The amended
agreement will expire in 2015 and based on the current prices in
the amended agreement, the purchase commitment remaining decreases
by $20.1 million.
GROWTH INITIATIVES
Deerland Peaking Station ("D1")
MAXIM is actively pursuing commercial arrangements that will
allow for the construction of the 190 MW D1 Station to commence
during 2013. MAXIM received regulatory approvals in 2008 to
construct and operate D1. The D1 site is located near Bruderheim in
Alberta's Industrial Heartland, and it is in close proximity to the
entry point of the proposed Gateway pipeline and adjacent to the
existing Deerland high voltage substation. This area is expected to
experience significant growth in electrical demand. D1 is the only
permitted peaking development project in the province of Alberta as
at the date of this press release. This project is attractive due
to an anticipated contraction of reliable base load supply in the
Alberta power market. As such, MAXIM expects peaking requirements
across Alberta to continue to grow to meet increasing demand and to
provide firm backup for additional intermittent wind resources.
During the second quarter of 2012, MAXIM entered into an agreement
to secure firm natural gas transportation services for D1.
Summit Coal Limited Partnership ("SUMMIT") Mine 14 Project
SUMMIT is wholly owned by MAXIM and was formed in 2011 to
advance the Mine 14 Project. SUMMIT has achieved certain key
milestones essential to commencing commercial operations of Mine
14. In 2011, the ERCB granted the license to commence underground
mining of the Mine 14 coal reserve. SUMMIT has firm terminal
capacity and terminal processing services to enable the majority of
Mine 14's proposed coal production to access the valuable seaborne
coking coal market commencing January 1, 2015. SUMMIT has also
secured firm 2013 delivery dates for critical mining equipment,
including continuous miners and shuttle cars. The field work for
the 2012 exploration program was recently completed and MAXIM
anticipates providing an updated Technical Report during the first
quarter of 2013, which will contribute to the advancement of a
strategic review related to SUMMIT's Mine 14 project.
Milner Expansion ("M2")
The AUC has granted MAXIM approval to develop a 500 MW
generating facility adjacent to the existing 150 MW generating
facility ("M1"). A lengthy public consultation and regulatory
process culminated in the project's final approval by the AUC on
August 10, 2011. On September 12, 2012 the Government of Canada
enacted new greenhouse gas legislation that limits the amount of
carbon dioxide emitted by coal-fired generation facilities. MAXIM
is examining ways to meet the new standards including development
of a natural gas-fired facility. All aspects are presently being
studied to determine the most viable and effective course of
action.
Buffalo Atlee ("B1")
MAXIM acquired the B1 Power Project, situated near Brooks,
Alberta, through an amalgamation with EarthFirst Canada Inc. This
project has the potential for development of over 200 MW of wind
generation capacity. Wind data has been collected on the site for
approximately five years and supports project development based on
higher power prices than those realized during recent months. MAXIM
holds an exploratory Crown land permit with a term of five years,
expiring on January 1, 2016. The addition of wind generation to
MAXIM's existing portfolio of assets will diversify MAXIM's
generation fuel types and provide the potential to offset the
impact of the new greenhouse gas legislation.
OUTLOOK
2012 Guidance
MAXIM's results are significantly impacted by Alberta spot power
prices. In preparing its guidance, management uses Alberta forward
electricity prices as a proxy for Alberta spot electricity prices.
The market for forward contracts is relatively illiquid and forward
prices may not be a good predictor of settled prices as they may
not factor in events such as unplanned outages that can cause a
significant increase in settled power prices. Notwithstanding,
MAXIM prepares its guidance using forward electricity price from
independent sources.
MAXIM is updating guidance that was provided on August 9, 2012
as follows:
($ in thousands except per share amounts)
----------------------------------------------------------------------------
Guidance provided on Updated 2012
Select guidance KPI's August 9, 2012 Guidance
----------------------------------------------------------------------------
Adjusted EBITDA 34,300 37,200
Funds from operations 34,900 37,700
Funds from operations per share -
basic and diluted ($ per share) 0.65 0.70
Adjusted net income 11,600 14,200
Adjusted net income per share -
basic and diluted ($ per share) 0.21 0.26
Net income 6,100 8,000
Net income per share- basic and
diluted ($ per share) 0.11 0.15
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MAXIM's revised 2012 guidance reflects an increase in all of its
guidance KPI's. The increase is primarily due to improved
performance at the Pittsfield facility during the third quarter as
well as greater volatility in Alberta spot prices during the third
quarter and beginning of the fourth quarter.
These projections are based on MAXIM`s existing portfolio of
assets, do not include the impact of possible acquisitions or the
commercialization of development initiatives, and are based on the
following assumptions:
Guidance provided on Updated 2012
Guidance Assumptions August 9, 2012 Guidance
----------------------------------------------------------------------------
Electricity deliveries (MWh):
HR Milner 722,227 645,550
Other facilities 532,942 557,898
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Total electricity deliveries 1,255,169 1,203,448
Net generation capacity at year end
(MW) 796 796
Capital expenditures (excluding
acquisitions):
France repowering and peaking
facilities 9,300 9,100
Development projects 12,500 8,900
Other assets 3,400 3,500
HR Milner 1,600 2,100
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Total capital expenditures 26,800 23,600
Average Alberta spot electricity
price ($/MWh) 64.80 63.86
Average annual foreign exchange
rates:
C$/USD 1.00 1.00
C$/Euro 1.27 1.25
Weighted average shares outstanding
- basic (000's) 54,084 54,084
Weighted average shares outstanding
- diluted (000's) 54,086 54,085
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The decrease in Milner generation from 722,227 MWh per August 9,
2012 guidance to 645,550 MWh is a result of reduced generation
during periods of lower power prices during the third quarter,
which is expected to continue in the fourth quarter. This is
partially offset by an increase in generation in the Northeast US
during the third quarter, primarily due to transmission constraints
and weather based demand at the Pittsfield facility.
Forecasted capital expenditures have decreased primarily to
reflect a deferral in the construction timeline for Deerland from
2012 to 2013.
CONFERENCE CALL FOR 2012 THIRD QUARTER RESULTS
MAXIM will host a conference call for analysts and investors on
Friday November 9, 2012 at 11:30 am MT. The call will be hosted by
John Bobenic, MAXIM's President and Chief Executive Officer, and by
Mike Mayder, Vice President, Finance and Chief Financial Officer.
To participate in this conference call, please dial (866) 696-5910
or (416) 340-2217 in the Toronto area. It is recommended that
participants call at least ten minutes prior to start time.
A recording of the conference call will be available from
November 9, 2012 to November 16, 2012. To access the replay, dial
(800) 408-3053 or (905) 694-9451 followed by the passcode 6805469.
In addition, the recording will be available commencing November 9,
2012 in the Investor Relations section of MAXIM's website at
www.maximpowercorp.com.
About MAXIM
Based in Calgary, Alberta, MAXIM is an independent power
producer, which acquires or develops, owns and operates innovative
and environmentally responsible power and power related projects.
MAXIM currently owns and operates 40 power plants in western
Canada, the United States and France, having 788 MW of electric and
111 MW of thermal net generating capacity. MAXIM trades on the TSX
under the symbol "MXG". For more information about MAXIM, visit our
website at www.maximpowercorp.com.
Statements in this release which describe MAXIM's intentions,
expectations or predictions, or which relate to matters that are
not historical facts are forward-looking statements. These
forward-looking statements involve known and unknown risks and
uncertainties which may cause the actual results, performances or
achievements of MAXIM to be materially different from any future
results, performances or achievements expressed in or implied by
such forward-looking statements. MAXIM may update or revise any
forward- looking statements, whether as a result of new
information, future events or changing market and business
conditions and will update such forward-looking statements as
required pursuant to applicable securities laws.
Contacts: Maxim Power Corp. John R. Bobenic President and CEO
(403) 750-9300 Maxim Power Corp. Michael R. Mayder Vice President,
Finance and CFO (403) 750-9311 www.maximpowercorp.com
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