TransAlta reports third quarter results and announces

TransAlta reports third quarter results and announces strategic
partnership with MidAmerican 
CALGARY, ALBERTA -- (Marketwire) -- 10/26/12 -- TransAlta Corporation
(TransAlta) (TSX:TA) (NYSE:TAC) today reported third quarter 2012
comparable earnings(1) of $41 million ($0.18 per share) versus
comparable earnings of $61 million ($0.27 per share) for the same
period in 2011.  
Comparable results for the quarter were primarily driven by strong
availability across the fleet as generation gross margins increased
by $51 million compared to the same period last year. Lower
operations, maintenance and administrative costs also benefited the
quarter. These gains were partially offset by higher planned major
maintenance and a loss in Energy Trading. Lower prices in the Alberta
and Pacific Northwest markets were also a factor.  


 
--  Comparable EBITDA(1, 2) for third quarter 2012 was $254 million compared
    to $237 million in the third quarter of 2011 
 
--  Funds from operations(1, 2) (FFO) for third quarter of 2012 were $232
    million compared to $168 million in the third quarter of 2011 
 
--  Net earnings attributable to common shareholders for the quarter were
    $56 million ($0.24 per share) compared to net earnings of $50 million
    ($0.22 per share) in the third quarter of 2011 

 
Consistent strength in Generation performance; on track to achieve
full year fleet availability of 89-90 per cent 
"Investments in our fleet are providing us with strong availability
and performance," said Dawn Farrell, TransAlta President and CEO.
"The majority of our major maintenance has been completed for the
year and we are set up to maintain this consistent performance over
the long term." 
Fleet availability remained strong for third quarter 2012 increasing
to 90.9 per cent compared to 83.9 per cent over the same period last
year. TransAlta has now completed five of six major maintenance
outages as planned on its coal units and remains on track to deliver
on its fleet availability goal of 89 - 90 per cent for the full year. 
TransAlta continues to generate strong cash flows and has ample
liquidity 
For the full year, TransAlta continues to target FFO at the low end
of its previously stated range of $800 - $900 million excluding the
one-time net penalty associated
 with the Sundance units 1 & 2
arbitration decision. FFO at these levels, combined with available
liquidity and the contribution from TransAlta's dividend reinvestment
plan, currently at an approximate 70 per cent participation level,
are more than sufficient to cover its dividend and sustaining capital
program in 2012. 
(1)Comparable earnings (loss), comparable earnings (loss) per share,
comparable EBITDA, and funds from operations, are not defined under
International Financial Reporting Standards ("IFRS"). Presenting
these measures from period to period provides supplemental
information to help management and shareholders evaluate earnings
trends in comparison with prior periods' results. Refer to the
Non-IFRS Measures section of the Management's Discussion and Analysis
("MD&A") for further discussion of these items, including, where
applicable, reconciliations to net earnings (loss) attributable to
common shareholders, operating income (loss), and cash flow from
operating activities. 
(2) Comparable EBITDA and funds from operations are key supplemental
performance measures for TransAlta which provide additional
information regarding the company's ability to cover its capital
requirements and dividends as well as strengthen its balance sheet
and finance growth. 
Strategic partnership  
TransAlta and MidAmerican Energy Holdings Company (MidAmerican)
announced today the creation of a new strategic partnership through
which the two companies will work together to develop, build and
operate new natural gas-fired electricity generation projects in
Canada.  
This partnership builds on an existing successful relationship. The
extensive power development and operating experience of both
companies, combined with TransAlta's deep knowledge of the Canadian
markets and MidAmerican's financial strength, is expected to
accelerate gas-fired power development for both partners. 
"The creation of this partnership is a new and exciting development
in our growth strategy and better positions the two companies to
pursue significant growth opportunities in Canada," said Dawn
Farrell, TransAlta president and CEO. "Studies are showing that more
than $200 billion worth of new investment in power generation is
needed in Canada over the next 20 years. MidAmerican is a strong
partner to enable us to capture a sizeable share of that market
opportunity, and this project will build off our already existing
business relationship, which dates back to 2001." 
The agreement encompasses all new natural gas-fueled generation
opportunities considered by either TransAlta or MidAmerican in
Canada, including TransAlta's proposed Sundance 7 project, an up to
800-megawatt project based in Alberta, Canada. All development and
construction or acquisition of approved projects will be funded on a
50-50 basis, and TransAlta will be responsible for construction
management, operation and maintenance of projects that proceed. 
Highlights - TransAlta third quarter 2012  
Financial 


 
--  Funds from operations of $232 million or $0.99 per share 
 
--  Comparable earnings of $41 million or $0.18 per share 
 
--  Dividends paid of $0.29 per share to common shareholders 
 
--  Approximately 70 per cent participation in our dividend reinvestment
    plan, resulting in an estimated annualized cash savings of approximately
    $200 million 

 
Operating 


 
--  Coal: Comparable gross margins from TransAlta's coal fleet increased $23
    million quarter over quarter despite higher planned outages at Alberta
    Coal 
 
--  Gas: Comparable gross margins from TransAlta's gas fleet increased $13
    million quarter over quarter as a result of strong availability and
    reduced gas input costs 
 
--  Renewables: Comparable gross margins increased $15 million quarter over
    quarter primarily due to strong hydro generation outpacing weak prices
    in Alberta and lower wind volumes in Western Canada 
 
--  Energy Trading: Gross margins decreased $61 million quarter over
    quarter. Third quarter losses were a result of unexpected weather
    patterns, and unfavourable market conditions relative to trading
    positions held 

 
Major maintenance  


 
--  TransAlta has completed the majority of its 2012 major maintenance
    program for its coal fleet. Major maintenance outages at Keephills 1 and
    2, Centralia, Sheerness and Sundance 3 have been completed. The
    remaining coal major maintenance outage is on track 

 
Growth 


 
--  Acquisition of the 125 megawatt (MW) dual-fuel Solomon power station for
    U.S. $318M. The Solomon power station is fully contracted with Fortescue
    Mining Group (FMG) under a long-term Power Purchase Agreement (PPA). The
    acquisition is expected to generate pre-financing cash flows of
    approximately $40 million per year and is accretive to both earnings and
    free cash flow per share 
 
--  68 MW New Richmond wind farm in Quebec; target completion by Q1 2013 

 
The following table depicts key financial results and statistical
operating data: 
Third Quarter 2012 Highlights: 


 
----------------------------------------------------------------------------
                                     3 months  3 months  9 months   9 months
              
                          ended     ended     ended      ended
In millions, unless otherwise       September September September  September
 stated                              30, 2012  30, 2011  30, 2012   30, 2011
----------------------------------------------------------------------------
Availability (%)                         90.9      83.9      88.1       83.7
----------------------------------------------------------------------------
Production (GWh)                       10,155    10,368    27,870     29,350
----------------------------------------------------------------------------
Revenue                                   538       629     1,601      1,962
----------------------------------------------------------------------------
Gross margin(2)                           330       371     1,055      1,307
----------------------------------------------------------------------------
Operating income (loss) (1)               132       106       (90)       523
----------------------------------------------------------------------------
Net earnings (loss) attributable to                                         
 common shareholders                       56        50      (652)       266
----------------------------------------------------------------------------
Comparable earnings (loss) (2)             41        61        64        201
----------------------------------------------------------------------------
Basic and diluted net earnings                                              
 (loss) per common share                 0.24      0.22     (2.85)      1.20
----------------------------------------------------------------------------
Comparable earnings per share(2)         0.18      0.27      0.28       0.91
----------------------------------------------------------------------------
Comparable earnings before                                                  
 interest, taxes, depreciation, and                                         
 amortization (EBITDA)(2)                 254       237       699        772
----------------------------------------------------------------------------
Funds from operations(2)                  232       168       571        620
----------------------------------------------------------------------------
Funds from operations per share(2)       0.99      0.75      2.49       2.79
----------------------------------------------------------------------------
Cash flow from operations                  14       212       275        503
----------------------------------------------------------------------------
                                                                            
(1) Gross margin and operating income are Additional IFRS measures. Refer to
 the Additional IFRS measures section of the MD&A.                          
                                                                            
(2) Comparable earnings, comparable earnings per share, comparable EBITDA,  
 funds from operations, and funds from operations per share are not defined 
 under IFRS. Refer to the Non-IFRS financial measures section of the MD&A   
 for an explanation and, where applicable, reconciliations to net           
 earnings(loss) attributable to common shareholders, operating income (loss)
 and cash flow from operating activities.                                   

 
The complete third quarter report for 2012, including MD&A and
unaudited interim financial statements, as well as our third quarter
presentation is available on the Investors section of our website:
www.transalta.com. 
Conference call  
TransAlta will hold a conference call and web cast at 9 a.m. MT (11
a.m. ET) today to discuss results. The call will begin with a short
address by Dawn Farrell, President and CEO, and Brett Gellner, Chief
Financial Officer, followed by a question and answer period for
investment analysts, investors, and other interested parties. A
question and answer period for the media will immediately follow.  
Please contact the conference operator five minutes prior to the
call, noting "TransAlta Corporation" as the company and "Jess
Nieukerk" as moderator 
Dial-in numbers:  
Toll-free North American participants - 1-800-319-4610  
Outside of Canada & USA call - 1-604-638-5340 
A link to the live webcast will be available via TransAlta's website,
www.transalta.com, under Web Casts in the Investor Relations section.
If you are unable to participate in the call, the instant replay is
accessible at 1- 604-638-9010 with TransAlta pass code 2231 followed
by the # sign. A transcript of the broadcast will be posted on
TransAlta's website once it becomes available. 
Note: If using a hands-free phone, lift the handset and press one to
ask a question. 
TransAlta is a power generation and wholesale marketing company
focused on creating long-term shareholder value. TransAlta maintains
a low-to-moderate risk profile by operating a highly contracted
portfolio of assets in Canada, the United States and Australia.
TransAlta's focus is to efficiently operate our biomass, geothermal,
wind, hydro, natural gas and coal facilities in order to provide our
customers with a reliable, low-cost source of power. For 100 years,
TransAlta has been a responsible operator and a proud contributor to
the communities where we work and live. TransAlta is recognized for
its leadership on sustainability by the Dow Jones Sustainability
North America Index, the FTSE4Good Index and the Jantzi Social Index.
TransAlta is Canada's largest investor-owned renewable energy
provider. 
This news release may contain forward looking statements, including
statements regarding the business and anticipated financial
performance of TransAlta Corporation. These statements are based on
TransAlta Corporation's belief and assumptions based on information
available at the time the assumption was made. These statements are
subject to a number of risks and uncertainties that may cause actual
results to differ materially from those contemplated by the
forward-looking statements. Some of the factors that could cause such
differences include, pricing in the market place, our inability to
enter into long term contracts due to prevailing market conditions,
legislative or regulatory developments, competition, global capital
markets activity, changes in interest rates, currency exchange rates,
inflation levels and general economic conditions in geographic areas
where TransAlta Corporation operates. 
Note: All financial figures are in Canadian dollars unless noted
otherwise.
Contacts:
TransAlta Corporation
Jess Nieukerk
Director, Investor Relations
1-800-387-3598 in Canada and U.S.
investor_relations@transalta.com 
TransAlta Corporation
Stacey Hatcher
Senior Corporate Relations Advisor
587-216 2242 or Toll Free: 1-855-255-9184
Alternate local number: 403-267-2540