TransAlta Renewables Reports Second Quarter 2023 Results
CALGARY, AB, Aug. 3, 2023 /CNW/ - Second Quarter 2023 Financial Highlights
Adjusted EBITDA(1) of $100 million
Free cash flow ("FCF")(1) of $86 million
Cash available for distribution ("CAFD")(1)(2) of $49 million or $0.18 per share
Earnings before income taxes of $17 million
Cash flow from operating activities of $41 million
Other Business Highlights & Updates
Entered into a definitive arrangement agreement with TransAlta Corporation where TransAlta Corporation will acquire all of the outstanding common shares of TransAlta Renewables subject to the approval the Company's common shareholders
Kent Hills rehabilitation program on track, all foundations have been replaced and 27 turbines have been fully reassembled. Turbines are being commissioned and returned to service as they are completed, to date 10 turbines have been placed back in operation and the remaining turbines are expected to return to service in the second half of 2023
Northern Goldfields Solar project has entered its commissioning phase. All major equipment has been installed and construction work is largely complete. Energization and testing processes have commenced and the facility is expected to achieve full commercial operations in the second half of 2023
Mount Keith 132kV expansion project is well advanced. The gas-insulated switchgear will be installed in August and the project will be operational in the second half of 2023
TransAlta Renewables Inc. ("TransAlta Renewables" or the "Company") (TSX: RNW) announced today financial results for the three and six months ended June 30, 2023.
"Overall, this quarter's performance was impacted by lower wind resources in both Canada and the United States, higher unplanned outages in US Wind and Solar and lower water resources. Given the natural variability of wind and water resources that was experienced in the first two quarters of 2023, together with the lower than expected availability performance, our distributable cash is trending toward the low end of our 2023 outlook." said Todd Stack, President at TransAlta Renewables.
"I am pleased that we have reached an arrangement agreement with TransAlta. This transaction provides RNW shareholders with an immediate premium and greater growth and cash flow certainty going forward. We are excited to bring the two companies back together, resulting in increased scale and enhanced opportunities that will drive value for our shareholders," added Mr. Stack.
Second Quarter 2023 Highlights
$ millions, unless otherwise stated | Three Months Ended | Six Months Ended | ||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |
Renewable energy production | 956 | 1,231 | 2,177 | 2,541 |
Revenues | 99 | 139 | 218 | 282 |
Adjusted EBITDA(1) | 100 | 126 | 228 | 265 |
Earnings before income taxes | 17 | 18 | 70 | 67 |
Free cash flow(1) | 86 | 87 | 179 | 195 |
Cash available for distribution(1) | 49 | 49 | 120 | 139 |
Net earnings attributable to common | 13 | 13 | 58 | 54 |
Cash flow from operating activities | 41 | 28 | 108 | 131 |
Net earnings per share attributable to | 0.05 | 0.05 | 0.22 | 0.20 |
Free cash flow per share(1),(2) | 0.32 | 0.33 | 0.67 | 0.73 |
Cash available for distribution per | 0.18 | 0.18 | 0.45 | 0.52 |
Dividends declared and paid per | 0.23 | 0.23 | 0.47 | 0.47 |
Second Quarter 2023 Results Summary
The Company's renewable energy production for the three and six months ended June 30, 2023, decreased by 275 GWh and 364 GWh, respectively, compared to the same periods in 2022. The decrease in both periods was mainly due to lower wind resources in both Canada and the United States, higher unplanned outages in US Wind and Solar, lower water resources and the sale of certain Hydro facilities in the fourth quarter of 2022.
Adjusted EBITDA for the three and six months ended June 30, 2023, decreased by $26 million and $37 million, respectively, compared to the same periods in 2022. The decrease in adjusted EBITDA for both the three and six months ended June 30, 2023 was a result of lower renewable energy production, lower environmental credit sales, lower liquidated damages recorded at the Windrise wind facility and higher operations, maintenance and administration ("OM&A") expenses due to higher insurance and escalation of long term service agreement costs.
FCF for the three and six months ended June 30, 2023 decreased by $1 million and $16 million, respectively, compared to the same periods in 2022, primarily due to lower adjusted EBITDA, partially offset by lower current income tax expense due to income tax recoveries in the Australian Gas segment, higher interest income from higher cash balances and higher market rates, and the settlement of a provision in Canadian Gas in 2022.
CAFD for the three months ended June 30, 2023 was consistent with the same period in 2022, primarily due to lower FCF being offset by lower tax equity distributions. CAFD for the six months ended June 30, 2023 decreased by $19 million compared to the same period in 2022, primarily due to lower FCF and higher scheduled principal repayment on the Windrise green bond, which commenced in the first quarter of 2023.
Net earnings attributable to common shareholders for the three months ended was consistent with the same period in 2022, while the six months ended June 30, 2023, increased by $4 million compared to the same period in 2022. Both the three and six months ended were favourably impacted by asset impairment reversals and lower depreciation, partially offset by lower revenues, lower liquidated damages at the Windrise wind facility and lower insurance recoveries in the Canadian Wind segment and higher OM&A expenses. For the six month period ended, June 30, 2023, finance income related to subsidiaries of TransAlta was higher due to higher dividends from Australia in the first quarter of the year compared to the prior year.
Cash flow from operating activities for the three months ended June 30, 2023 increased by $13 million primarily due to favourable changes in working capital partially offset by lower revenues and lower liquidated damages in the Canadian Wind segment. Cash flow from from operating activities for the six months ended June 30, 2023, decreased by $23 million compared to the same periods in 2022 due to lower revenues, lower liquidated damages in the Canadian Wind segment, and higher OM&A, partially offset by higher finance income related to subsidiaries of TransAlta and by favourable changes in working capital. In addition, the prior periods operating cash flows were lower due to the settlement of the liquidated damages at Sarnia within the Canadian Gas segment.
Significant Events and Other Updates
TransAlta to Acquire TransAlta Renewables to Simplify Structure and Enhance Strategic Position
On July 10, 2023, TransAlta Renewables Inc. and TransAlta Corporation entered into a definitive arrangement agreement (the "Agreement") under which TransAlta Corporation will acquire all of the outstanding common shares of the Company not already owned, directly or indirectly, by TransAlta Corporation and certain of its affiliates, subject to the approval of TransAlta Renewables shareholders.
The transaction will provide shareholders of the combined company with a single strategy and a clear and compelling opportunity for long-term growth, with greater clarity around the execution of the Clean Electricity Growth Plan. TransAlta Renewables shareholders will benefit from a fair offer reflecting an attractive premium, a clear and sustainable path going forward, ownership in an expanded pool of assets and exposure to the Alberta electricity market.
Under the terms of the Agreement, each TransAlta Renewables share will be exchanged for, at the election of each holder of TransAlta Renewables shares, (i) 1.0337 common shares of TransAlta or (ii) $13.00 in cash. The consideration payable to TransAlta Renewables shareholders is subject to pro-rationing based on a maximum aggregate number of TransAlta shares that may be issued to TransAlta Renewables shareholders of 46,441,779 and a maximum aggregate amount of cash of $800 million.
The consideration payable to TransAlta Renewables shareholders represents an 18.3 per cent premium based on the closing price of TransAlta Renewables shares on the Toronto Stock Exchange ("TSX") as of July 10, 2023, and a 13.6 per cent premium relative to TransAlta Renewables' 20-day volume-weighted average price per share as of July 10, 2023. The total consideration paid to TransAlta Renewables shareholders is valued at $1.4 billion on July 10, 2023 of which $800 million will be paid in cash, and the remaining balance in common shares of TransAlta. The combined company will operate as TransAlta and remain listed on the TSX and the New York Stock Exchange ("NYSE"), under the symbols "TA" and "TAC", respectively.
The TransAlta Renewables Board (with abstentions by TransAlta-nominated directors) unanimously determined that the Agreement is in the best interests of the Company and is fair to TransAlta Renewables shareholders, approved the execution and delivery of the Agreement and unanimously recommends that shareholders vote in favour of the Agreement.
Further details of the arrangement will be contained in a management information circular which is expected to be mailed out to shareholders on or about August 25, 2023. A special meeting with the Company shareholders will be held on or about Sept. 26, 2023. If all approvals are received and other closing conditions satisfied, the transaction is expected to be completed in early October 2023.
Notes |
(1) These items are not defined and have no standardized meaning under IFRS. Please refer to the Discussion of Operating Results, Non-IFRS Measures and Reconciliation of Non-IFRS Measures sections of the MD&A for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS. |
(2) Free cash flow per share and cash available for distribution per share are calculated as free cash flow and cash available for distribution, respectively, divided by the weighted average number of common shares outstanding during the period of 267 million shares for June 30, 2023 (June 30, 2022 - 267 million shares) |
(3) Includes production from Canadian Wind, Canadian Hydro and US Wind and Solar and excludes Canadian, US and Australian gas-fired generation. Production is not a key revenue driver for gas-fired facilities as most of their revenues are capacity-based. |
Non-IFRS Measures
We evaluate our performance using a variety of measures to provide management and investors with an understanding of our financial position and results. Certain of the measures discussed in this earnings release are not defined under IFRS and therefore should not be considered in isolation, as a substitute for, as an alternative to, or more meaningful than measures as determined in accordance with IFRS when assessing our financial performance or liquidity. These measures have no standardized meaning under IFRS and may not be comparable to similar measures presented by other issuers.
The Company's key non-IFRS measures are adjusted EBITDA, FCF and CAFD.
Adjusted EBITDA
Adjusted EBITDA is an important metric for management since it represents our core business profitability. Interest, taxes, depreciation and amortization are not included, as differences in accounting treatments may distort our core business results. We present adjusted EBITDA along with operational information of the assets in which we own an economic interest so that readers can better understand and evaluate the drivers of those assets in which we have an economic interest. Since the economic interests are designed to provide the Company with returns as if we owned the assets themselves, presenting the operational information and adjusted EBITDA provides a more complete picture for readers to understand the underlying nature of the investments and the resultant cash flows that would otherwise only be presented as finance income from the investments.
Adjusted EBITDA is composed of our reported EBITDA adjusted to exclude the impact of unrealized mark-to-market gains and losses, asset impairments and reversals and certain insurance recoveries, plus the adjusted EBITDA of the facilities in which we hold an economic interest, which is the facilities' reported EBITDA adjusted for: 1) finance lease income and the change in the finance lease receivable amount; 2) contractually fixed management costs; 3) interest earned on the prepayment of certain transmission costs; 4) the impact of unrealized mark-to-market gains and losses; and 5) asset impairments and reversals.
Free Cash Flow
FCF represents the amount of cash that is available from operations and investments in subsidiaries of TransAlta in which we have an economic interest, to invest in growth initiatives, to make scheduled principal repayments on debt, repay maturing debt, pay common share dividends or repurchase common shares. Changes in working capital are excluded so that FCF is not distorted by changes that we consider temporary in nature, reflecting, among other things, the impact of seasonal factors and the timing of receipts and payments.
FCF is calculated as the cash flow from operating activities before changes in working capital, less sustaining capital expenditures, distributions paid to subsidiaries' non-controlling interest, finance income from economic interests and principal repayments on lease obligations, plus FCF of the assets owned through economic interests, which is calculated as adjusted EBITDA from the economic interests less interest expense, sustaining capital expenditures, current income tax expense, principal repayments on lease obligations and working capital and other timing. FCF per share is calculated using the weighted average number of common shares outstanding during the period.
Cash Available for Distribution
CAFD can be used as a proxy for the cash that will be available to common shareholders of the Company. CAFD is calculated as FCF less tax equity distributions and scheduled principal repayments of amortizing debt.
Presenting FCF and CAFD helps readers assess our cash flows in comparison to prior periods. See the Reconciliation of Non-IFRS Measures sections of the MD&A for additional information.
Reconciliation of these non-IFRS financial measures to the most comparable IFRS measure are provided below.
Reconciliation of Non-IFRS Measures
Since the economic interests are designed to provide the Company with returns as if we owned the assets ourselves, presenting the operating information and adjusted EBITDA provides a more complete picture to understand the underlying nature of the investments and the resultant cash flows that would otherwise only be presented as finance income from investments.
The following tables reflect adjusted EBITDA and provides reconciliation to earnings before income taxes for the three months and six months ended June 30, 2023 and June 30, 2022:
Owned Assets | Economic Interests | ||||||||||
Three months ended June 30, 2023 $ millions | Canadian Wind | Canadian Hydro | Canadian Gas | Corporate | US Wind and Solar | US Gas | Australian Gas | Total | Investments in | IFRS Financials | |
Revenues(1) | 44 | 9 | 46 | — | 25 | 6 | 49 | 179 | (80) | 99 | |
Fuel, royalties and | 5 | 1 | 17 | — | 1 | 2 | 2 | 28 | (5) | 23 | |
Gross margin | 39 | 8 | 29 | — | 24 | 4 | 47 | 151 | (75) | 76 | |
Operations, | 10 | 3 | 9 | 6 | 5 | 1 | 12 | 46 | (18) | 28 | |
Taxes, other than | 2 | — | — | — | 2 | — | — | 4 | (2) | 2 | |
Net other operating | 1 | — | — | — | — | — | — | 1 | — | 1 | |
Adjusted EBITDA(4) | 26 | 5 | 20 | (6) | 17 | 3 | 35 | 100 | |||
Depreciation and | (33) | ||||||||||
Asset impairment | 10 | ||||||||||
Finance income | 3 | ||||||||||
Interest income | 2 | ||||||||||
Interest expense | (12) | ||||||||||
Foreign exchange gain | 2 | ||||||||||
Earnings before | 17 | ||||||||||
(1) Adjusted EBITDA excludes the impact of unrealized mark-to-market gains or losses. Amounts related to economic interests include finance lease income adjusted for change in finance lease receivable. |
(2) Amounts related to economic interests include interest earned on the prepayment of certain transmission costs. |
(3) Amounts related to economic interests include the effect of contractually fixed management costs. |
(4) Adjusted EBITDA is a non-IFRS measure and has no standardized meaning under IFRS. |
Owned Assets | Economic Interests | ||||||||||
Three months $ millions | Canadian Wind | Canadian Hydro | Canadian Gas | Corporate | US Wind and Solar | US Gas | Australian Gas | Total | Investments in | IFRS Financials | |
Revenues(1) | 57 | 10 | 73 | — | 31 | 7 | 42 | 220 | (81) | 139 | |
Fuel, royalties and | 5 | 1 | 44 | — | — | 4 | 1 | 55 | (5) | 50 | |
Gross margin | 52 | 9 | 29 | — | 31 | 3 | 41 | 165 | (76) | 89 | |
Operations, | 10 | 2 | 9 | 5 | 4 | 1 | 7 | 38 | (12) | 26 | |
Taxes, other than | 2 | — | — | — | 2 | — | — | 4 | (2) | 2 | |
Net other operating | (3) | — | — | — | — | — | — | (3) | (7) | (10) | |
Adjusted EBITDA(4) | 43 | 7 | 20 | (5) | 25 | 2 | 34 | 126 | |||
Depreciation and | (36) | ||||||||||
Asset impairment | (11) | ||||||||||
Finance income | 3 | ||||||||||
Interest income | 1 | ||||||||||
Interest expense | (12) | ||||||||||
Foreign exchange | 2 | ||||||||||
Earnings before | 18 | ||||||||||
(1) Adjusted EBITDA excludes the impact of unrealized mark-to-market gains or losses. Amounts related to economic interests include finance lease income adjusted for change in finance lease receivable. |
(2) Amounts related to economic interests include interest earned on the prepayment of certain transmission costs. |
(3) Amounts related to economic interests include the effect of contractually fixed management costs. |
(4) Adjusted EBITDA is a non-IFRS measure and has no standardized meaning under IFRS. |
Owned Assets | Economic Interests | ||||||||||
Six months ended June 30, 2023 $ millions | Canadian Wind | Canadian Hydro | Canadian Gas | Corporate | US Wind and Solar | US Gas | Australian Gas | Total | Investments in | IFRS financials | |
Revenues(1) | 107 | 12 | 99 | — | 58 | 12 | 93 | 381 | (163) | 218 | |
Fuel, royalties and | 8 | 2 | 40 | — | 2 | 6 | 3 | 61 | (11) | 50 | |
Gross margin | 99 | 10 | 59 | — | 56 | 6 | 90 | 320 | (152) | 168 | |
Operations, | 21 | 5 | 17 | 12 | 9 | 2 | 20 | 86 | (31) | 55 | |
Taxes, other than | 4 | 1 | — | — | 3 | — | — | 8 | (3) | 5 | |
Net other operating | (2) | — | — | — | — | — | — | (2) | — | (2) | |
Adjusted EBITDA(4) | 76 | 4 | 42 | (12) | 44 | 4 | 70 | 228 | |||
Depreciation and | (67) | ||||||||||
Asset impairment | 20 | ||||||||||
Finance income | 26 | ||||||||||
Interest income | 3 | ||||||||||
Interest expense | (24) | ||||||||||
Foreign exchange gain | 2 | ||||||||||
Earnings before | 70 | ||||||||||
(1) Adjusted EBITDA excludes the impact of unrealized mark-to-market gains or losses. Amounts related to economic interests include finance lease income adjusted for change in finance lease receivable. |
(2) Amounts related to economic interests include interest earned on the prepayment of certain transmission costs. |
(3) Amounts related to economic interests include the effect of contractually fixed management costs. |
(4) Adjusted EBITDA is a non-IFRS measure and has no standardized meaning under IFRS. |
Owned Assets | Economic Interests | ||||||||||
Six months ended | Canadian Wind | Canadian Hydro | Canadian Gas | Corporate | US Wind and Solar | US Gas | Australian Gas | Total | Investments in | IFRS financials | |
Revenues(1) | 127 | 14 | 142 | — | 62 | 13 | 85 | 443 | (161) | 282 | |
Fuel, royalties and | 9 | 2 | 84 | — | 1 | 7 | 3 | 106 | (11) | 95 | |
Gross margin | 118 | 12 | 58 | — | 61 | 6 | 82 | 337 | (150) | 187 | |
Operations, | 19 | 4 | 17 | 11 | 8 | 2 | 14 | 75 | (24) | 51 | |
Taxes, other than | 3 | — | 1 | — | 3 | — | — | 7 | (3) | 4 | |
Net other operating | (10) | — | — | — | — | — | — | (10) | (7) | (17) | |
Adjusted EBITDA(4) | 106 | 8 | 40 | (11) | 50 | 4 | 68 | 265 | |||
Depreciation and | (73) | ||||||||||
Asset impairment | (11) | ||||||||||
Finance income related to subsidiaries of | 22 | ||||||||||
Interest income | 2 | ||||||||||
Interest expense | (25) | ||||||||||
Foreign exchange gain | 3 | ||||||||||
Earnings before income | 67 | ||||||||||
(1) Adjusted EBITDA excludes the impact of unrealized mark-to-market gains or losses. Amounts related to economic interests include finance lease income adjusted for change in finance lease receivable. |
(2) Amounts related to economic interests include interest earned on the prepayment of certain transmission costs. |
(3) Amounts related to economic interests include the effect of contractually fixed management costs. |
(4) Adjusted EBITDA is a non-IFRS measure and has no standardized meaning under IFRS. |
Reconciliation of Reported Cash Flow from Operating Activities to FCF and CAFD
Three Months Ended | 6 Months Ended | |||
$ millions | June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 |
Cash flow from operating activities | 41 | 28 | 108 | 131 |
Change in non-cash operating working capital | (4) | 19 | (2) | 2 |
Cash flow from operations before changes in | 37 | 47 | 106 | 133 |
Adjustments: | ||||
Sustaining capital expenditures – owned assets | (7) | (5) | (10) | (9) |
Finance income – economic interests(1) | (3) | (3) | (26) | (22) |
Principal repayments of lease obligations - owned | (1) | (1) | (1) | (1) |
FCF - economic interests(1) | 60 | 49 | 110 | 94 |
FCF(2) | 86 | 87 | 179 | 195 |
Deduct: | ||||
Tax equity distributions | (7) | (9) | (18) | (19) |
Principal repayments of amortizing debt(3) | (30) | (29) | (41) | (37) |
CAFD(2) | 49 | 49 | 120 | 139 |
Weighted average number of common shares | 267 | 267 | 267 | 267 |
FCF per share(2) | 0.32 | 0.33 | 0.67 | 0.73 |
CAFD per share(2) | 0.18 | 0.18 | 0.45 | 0.52 |
(1) Refer to the Reconciliation of FCF to Finance Income Related to Subsidiaries of TransAlta below in this earnings release. |
(2) These items are non-IFRS measures and have no standardized meaning under IFRS. Refer to the Additional IFRS Measures and Non-IFRS Measures |
(3) Includes owned assets and economic interests and excludes the Pingston bond repayment. |
Reconciliation of FCF to Finance Income Related to Subsidiaries of TransAlta
The following table is a reconciliation of the finance income recognized on those assets we hold an economic interest in.
Three Months Ended | Six Months Ended | |||
$ millions | June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 |
Finance income related to subsidiaries of | 3 | 3 | 26 | 22 |
Tax equity distributions | 7 | 9 | 18 | 19 |
Principal repayments of amortizing debt | 5 | 5 | 10 | 10 |
Return of capital | 25 | 22 | 40 | 40 |
Effects of changes in working capital and other timing | 20 | 10 | 16 | 3 |
FCF - economic interests(1) | 60 | 49 | 110 | 94 |
(1)This item is a non-IFRS measure and has no standardized meaning under IFRS. Refer to the Non-IFRS Measures section of this earnings release for further details. |
Reconciliation of Adjusted EBITDA to FCF and CAFD
The table below bridges our adjusted EBITDA to our FCF and CAFD for the three months ended June 30, 2023 and 2022:
Owned Assets | Economic Interests | ||||||||
Three months ended June 30, 2023 | Canadian Wind | Canadian Hydro | Canadian | Corporate | US Wind | US Gas(1) | Australian | Total | |
Adjusted EBITDA(1) | 26 | 5 | 20 | (6) | 17 | 3 | 35 | 100 | |
Provisions and contract liabilities | 1 | — | — | — | — | — | — | 1 | |
Interest expense | — | — | — | (9) | (1) | — | (7) | (17) | |
Current income tax (expense) | (4) | — | — | — | — | — | 13 | 9 | |
Sustaining capital expenditures | (3) | (1) | (3) | — | (1) | — | (2) | (10) | |
Interest income | — | — | — | 2 | — | — | 3 | 5 | |
Principal repayments lease obligations | (1) | — | — | — | — | — | — | (1) | |
Other | — | — | — | (1) | — | — | — | (1) | |
FCF(2) | 19 | 4 | 17 | (14) | 15 | 3 | 42 | 86 | |
Deduct: | |||||||||
Tax equity distributions | — | — | — | — | (7) | — | — | (7) | |
Principal repayments of | (25) | — | — | — | — | — | (5) | (30) | |
CAFD(2) | (6) | 4 | 17 | (14) | 8 | 3 | 37 | 49 | |
(1) Adjusted EBITDA is defined in the Additional IFRS Measures and Non-IFRS Measures sections and reconciled to earnings before income taxes above. |
(2) FCF and CAFD are defined in the Additional IFRS Measures and Non-IFRS Measures sections and reconciled to cash flow from operating activities above. |
Owned Assets | Economic Interests | ||||||||
Three months ended June 30, 2022 | Canadian Wind | Canadian Hydro | Canadian | Corporate | US Wind | US Gas | Australian | Total | |
Adjusted EBITDA(1) | 43 | 7 | 20 | (5) | 25 | 2 | 34 | 126 | |
Provisions and contract liabilities | — | — | (12) | — | — | — | — | (12) | |
Interest expense | — | — | — | (10) | (1) | — | (6) | (17) | |
Current income tax expense | (1) | — | — | — | (1) | — | (5) | (7) | |
Realized foreign exchange gain | — | — | — | 1 | — | — | — | 1 | |
Sustaining capital expenditures | (3) | — | (2) | — | (1) | — | — | (6) | |
Interest income | — | — | — | 1 | — | — | 2 | 3 | |
Principal repayments lease obligations | (1) | — | — | — | — | — | — | (1) | |
FCF(2) | 38 | 7 | 6 | (13) | 22 | 2 | 25 | 87 | |
Deduct: | |||||||||
Tax equity distributions | — | — | — | — | (9) | — | — | (9) | |
Principal repayments of | (24) | — | — | — | — | — | (5) | (29) | |
CAFD(2) | 14 | 7 | 6 | (13) | 13 | 2 | 20 | 49 | |
(1) Adjusted EBITDA is defined in the Additional IFRS Measures and Non-IFRS Measures sections and reconciled to earnings before income taxes above. |
(2) FCF and CAFD are defined in the Additional IFRS Measures and Non-IFRS Measures sections and reconciled to cash flow from operating activities above. |
Owned Assets | Economic Interests | ||||||||
Six months ended June 30, 2023 | Canadian Wind | Canadian Hydro | Canadian | Corporate | US Wind | US Gas | Australian | Total | |
Adjusted EBITDA(1) | 76 | 4 | 42 | (12) | 44 | 4 | 70 | 228 | |
Interest expense | — | — | — | (18) | (2) | — | (14) | (34) | |
Current income tax (expense) | (12) | (2) | — | — | — | — | 7 | (7) | |
Sustaining capital expenditures | (5) | (1) | (4) | — | (1) | — | (4) | (15) | |
Interest income | — | — | — | 3 | — | — | 6 | 9 | |
Principal repayments lease obligations | (1) | — | — | — | — | — | — | (1) | |
Other | — | — | — | (1) | — | — | — | (1) | |
FCF(2) | 58 | 1 | 38 | (28) | 41 | 4 | 65 | 179 | |
Deduct: | |||||||||
Tax equity distributions | — | — | — | — | (18) | — | — | (18) | |
Principal repayments of amortizing debt | (31) | — | — | — | — | — | (10) | (41) | |
CAFD(2) | 27 | 1 | 38 | (28) | 23 | 4 | 55 | 120 | |
(1) Adjusted EBITDA is defined in the Additional IFRS Measures and Non-IFRS Measures sections and reconciled to earnings before income taxes above. |
(2) FCF and CAFD are defined in the Additional IFRS Measures and Non-IFRS Measures sections and reconciled to cash flow from operating activities above. |
Owned Assets | Economic Interests | |||||||
Six months ended June 30, 2022 | Canadian Wind | Canadian Hydro | Canadian | Corporate | US Wind | US Gas | Australian | Total |
Adjusted EBITDA(1) | 106 | 8 | 40 | (11) | 50 | 4 | 68 | 265 |
Provisions and contract liabilities | (1) | — | (12) | — | — | — | — | (13) |
Interest expense | — | — | — | (21) | (1) | — | (12) | (34) |
Current income tax expense | (1) | — | — | — | (2) | — | (10) | (13) |
Realized foreign exchange gain | — | — | — | 1 | — | — | — | 1 |
Sustaining capital expenditures | (6) | — | (3) | — | (2) | — | (3) | (14) |
Interest income | — | — | — | 2 | — | — | 2 | 4 |
Principal repayments lease obligations | (1) | — | — | — | — | — | — | (1) |
FCF(2) | 97 | 8 | 25 | (29) | 45 | 4 | 45 | 195 |
Deduct: | ||||||||
Tax equity distributions | — | — | — | — | (19) | — | — | (19) |
Principal repayments of amortizing debt | (27) | — | — | — | — | — | (10) | (37) |
CAFD(2) | 70 | 8 | 25 | (29) | 26 | 4 | 35 | 139 |
(1) Adjusted EBITDA is defined in the Additional IFRS Measures and Non-IFRS Measures sections and reconciled to earnings before income taxes above. |
(2) FCF and CAFD are defined in the Additional IFRS Measures and Non-IFRS Measures sections and reconciled to cash flow from operating activities above. |
A complete copy of TransAlta Renewables' second quarter MD&A and unaudited financial statements are available through TransAlta Renewables' website at www.transaltarenewables.com or through SEDAR at www.sedarplus.ca.
About TransAlta Renewables Inc.
TransAlta Renewables is among the largest of any publicly traded renewable independent power producers ("IPP") in Canada. Our asset platform and economic interests are diversified in terms of geography, generation and counterparties and consist of interests in 26 wind facilities, 11 hydroelectric facilities, eight natural gas generation facilities, two solar facilities, one natural gas pipeline, and one battery storage project, representing an ownership interest of 2,965 megawatts of net owned generating capacity, located in the provinces of British Columbia, Alberta, Ontario, Québec, New Brunswick, the States of Pennsylvania, New Hampshire, Wyoming, Massachusetts, Michigan, Minnesota, Washington, North Carolina, and the State of Western Australia.
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 acquisition by TransAlta of all of the outstanding common shares of the Company pursuant to the definitive arrangement agreement dated July 10, 2023, including the benefits of such transaction and the timing and completion of such transaction; the remediation of the Kent Hills wind facility, including the expected timing for return to service and turbine commissioning; the Mount Keith transmission expansion and Northern Goldfields construction projects, including timing of commercial operation; the payment of future dividends and expectations regarding the amount of such dividends relative to CAFD; timing of the Company's cash tax horizon in Canada; identifying opportunities to extend our cash tax horizon; impact on cash available for distribution absent growth; and ability to meet our 2023 guidance.
The forward-looking statements contained in this news release are based on current expectations, estimates, projections and assumptions, having regard to the Company's experience and its perception of historical trends, and includes, but is not limited to, expectations, estimates, projections and assumptions relating to: sufficiency of our budgeted capital expenditures in carrying out our business plan; applicable laws, regulations and government policies; the availability and cost of labour, services and infrastructure; and the satisfaction by third parties of their obligations, including under power purchase agreements. These statements are subject to a number of risks and uncertainties that could cause actual plans, actions and results to differ materially from current expectations including, but not limited to: our potential inability to identify accretive growth opportunities or to fund any such growth opportunities; our potential inability to acquire operating or development assets from TransAlta; competitive factors in the renewable power industry; operational breakdowns, failures, or other disruptions; failure to meet financial expectations; inability to achieve our ESG targets; general domestic and international economic and political developments, including armed hostilities, the threat of terrorism, cyberattacks, diplomatic developments or other similar events; equipment failure and our ability to carry out or have completed the repairs in a cost-effective or timely manner, or at all, including if the remediation at the Kent Hills wind facilities is more costly or takes longer than expected; industry risk and competition; fluctuations in the value of foreign currencies; counterparty credit risk; changes to our relationship with TransAlta Corporation; inadequacy or unavailability of insurance coverage; legal, regulatory and contractual disputes and proceedings involving the Company; changes in economic and market conditions; reduced access to the capital markets, including debt, equity and tax equity; changes in tax, environmental, and other laws and regulations; adverse weather impacts; legal, regulatory and contractual disputes and proceedings involving the Company, including the Kent Hills rehabilitation claim; and other risks and uncertainties discussed in the Company's materials filed with the Canadian securities regulatory authorities from time to time and as also set forth in the Company's MD&A and Annual Information Form for the year ended December 31, 2022. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company's expectations only as of the date of this news release. The Company disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Note: All financial figures are in Canadian dollars unless noted otherwise.
SOURCE TransAlta Renewables Inc
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