TransAlta Reports Solid First Quarter 2013 Results

TransAlta Reports Solid First Quarter 2013 Results 
CALGARY, ALBERTA -- (Marketwired) -- 04/23/13 --  
HIGHLIGHTS 


 
--  Strong fleet availability of 91.5 per cent for the quarter - supporting
    the annual target of 89 to 90 per cent 
--  Comparable EBITDA(1,2,3) increased to $267 million for the quarter, up
    $15 million from the same period in 2012 driven by increased production
    from the generation segment 
--  Funds From Operations(2,3) ("FFO") increased $3 million to $192 million
    compared to prior year 
--  Operations Maintenance and Administration costs ("OM&A") declined $13
    million from the same period in 2012 
--  Energy Trading results delivered $17 million of gross margin in the
    first quarter 
--  New Richmond wind farm in Quebec began commercial operation on March 13,
    2013, adding 68 MW to TransAlta's renewables portfolio

 
TransAlta Corporation (TransAlta) (TSX:TA) (NYSE:TAC) today reported
a comparable EBITDA increase of $15 million to $267 million compared
to the first quarter of 2012 and an increase in funds from operations
of $3 million to $192 million compared to the prior year. 
"I am pleased to release results today that demonstrate another solid
quarter for TransAlta with higher year over year production as well
as strong fleet availability which support our annual targets," said
Dawn Farrell, President and CEO. "Furthermore, we have been able to
offset declines in revenue from low pricing in our Centralia
operations with strong performance by our fleet and growth from our
Solomon acquisition. Our cost reduction efforts from last year are
holding and our teams are focused on growth. The addition of the New
Richmond wind farm will be a positive contribution to shareholder
value going forward." 
Despite delivering a solid operational quarter and consistent EBITDA,
comparable earnings(2) decreased year over year largely due to lower
comparable tax recoveries in the quarter compared to the same period
in 2012 which recorded a substantial recovery from a one-time win. 
(1) EBITDA refers to Earnings before interest, taxes, depreciation
and amortization. 
(2) 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. 
(3) 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. 
The company recorded a loss of $11 million on reported earnings for
the quarter primarily driven by the de-designation of hedges. For
these contracts that settled in the first quarter of 2013, the
related gain had already been recognized in earnings during the first
quarter of 2012, with the cash received in 2013. TransAlta also
recorded a one-time loss due to the realization of pension funding
obligations associated with the management of the Highvale mine which
were previously included in the cost of coal. 
Consistent Strength in Generation Performance Helping Offset
Unfavorable Contract Pricing Conditions 
Fleet availability remained strong for first quarter 2013 at 91.5 per
cent compared to 91.7 per cent over the same period last year.
TransAlta is close to completing one of four major maintenance
outages planned on its coal units for the year and remains on track
to deliver on its fleet availability goal of 89 - 90 per cent for the
full year. 
Highlights - TransAlta first quarter 2013 
Financial 


 
--  Funds from operations of $192 million or $0.74 per share
 
--  Comparable earnings of $32 million or $0.12 per share
 
--  Dividends paid of $0.29 per share to common shareholders 
 
--  Solomon acquisition contributed $9 million to comparable EBITDA

 
Operating 


 
--  Coal: Comparable gross margins from TransAlta's coal fleet decreased $5
    million quarter over quarter primarily as a result of higher unplanned
    outages and higher outage penalties due to higher rolling average pool
    prices. 
 
--  Gas: Comparable gross margins from TransAlta's gas fleet, excluding
    contributions from the Solomon acquisition, decreased $4 million quarter
    over quarter as a result of increased gas input costs 
 
--  Renewables: Comparable gross margins increased $5 million quarter over
    quarter primarily due to higher hydro margins
 
--  Energy Trading: Gross margins were consistent quarter over quarter at
    $17 million for the current quarter

 
Major maintenance  


 
--  2013 marks the return to a normalized planned major maintenance program.
    TransAlta has nearly completed the planned Sundance Unit 4 outage - the
    first of four major outages scheduled for 2013. The three remaining
    major maintenance coal outages are on track to be completed in 2013.

 
Growth 


 
--  TransAlta expanded its Canadian renewables fleet with the addition of
    the 68 MW New Richmond wind farm in Quebec, which began commercial
    operation on March 13, 2013

 
Significant Events 
Keephills Unit 1 
On March 26, 2013, TransAlta announced an outage that occurred on
March 5, 2013 at Unit 1 of our Keephills facility due to a winding
failure found in the generator. TransAlta has given notice under the
Power Purchase Arrangement ("PPA") to the PPA Buyer and the Balancing
Pool of a High Impact Low Probability ("HILP") Force Majeure event.
In the event of force majeure, TransAlta is entitled to continue to
receive its PPA capacity payment and is protected under the terms of
the PPA from having to pay availability penalties. As a result,
TransAlta does not expect the outage to have a material financial
impact on the Corporation. TransAlta is working with the original
equipment manufacturer of the generator to safely return the Unit to
service, which is currently expected to be in early May 2013. 
Centralia Thermal  
On July 25, 2012, TransAlta announced that it had entered into an
11-year agreement to provide electricity from the Centralia Thermal
plant to Puget Sound Energy ("PSE"). The agreement was approved, with
conditions, by the Washington Utilities and Transportation Commission
("WUTC") on January 9, 2013. On January 23, 2013, it was announced
that PSE had filed a petition for reconsideration of certain
conditions within the decision issued by the WUTC. On March 22, 2013,
the administrative law judge managing the regulatory hearing process
issued two Commission Orders to establish an amended timeline for
addressing the petition for reconsideration. The deadline for filing
answers to the reconsideration motion is May 30, 2013, and the
timeline for a decision on the reconsideration motion is no later
than June 28, 2013. 
Sunhills Mining Limited Partnership  
Effective January 17, 2013, TransAlta assumed, through its wholly
owned Sunhills Mining Limited Partnership ("Sunhills"), operations
and management control of the Highvale Mine. TransAlta and the
previous service provider are committed to a seamless transition
including continued employment at the Highvale Mine for more than 600
people and consequently, Sunhills agreed to assume responsibility for
certain pension plan and pension funding obligations which we had
previously funded through the payments made under the mining
contracts. As a result, a pre-tax loss of $29 million was recognized,
along with the corresponding liabilities.  
Sunhills also entered into a finance lease for certain mining
equipment that was used by the service provider in mining operations.
As a result, $21 million in mining equipment has been capitalized to
property, plant and equipment and the related finance lease
obligation recognized. Sunhills is eligible to purchase the assets
subject to lease, at the end of the lease term, for a nominal amount. 
The following table depicts key financial results and statistical
operating data: 
First Quarter 2013 Highlights 


 
----------------------------------------------------------------------------
                                             3 months ended   3 months ended
In $CAD millions, unless otherwise stated    March 31, 2013   March 31, 2012
----------------------------------------------------------------------------
Availability (%)                                       91.5             91.7
----------------------------------------------------------------------------
Production (GWh)                                     10,644            9,441
----------------------------------------------------------------------------
Revenue                                                $540             $644
----------------------------------------------------------------------------
Gross margin(1)                                        $339             $469
----------------------------------------------------------------------------
Operating income(1)                                     $76             $171
----------------------------------------------------------------------------
Net earnings (loss) attributable to common                                  
 shareholders                                          $(11)             $88
----------------------------------------------------------------------------
Comparable earnings(2)                                  $32              $44
----------------------------------------------------------------------------
Basic and diluted earnings (loss) per common                                
 share                                               $(0.04)           $0.39
----------------------------------------------------------------------------
Comparable earnings per share(2)                      $0.12            $0.20
----------------------------------------------------------------------------
Comparable Earnings before interest, taxes,                                 
 depreciation, and amortization (EBITDA)(2)            $267             $252
----------------------------------------------------------------------------
Funds from operations(2)                               $192             $189
----------------------------------------------------------------------------
Funds from operations per share(2)                    $0.74            $0.84
----------------------------------------------------------------------------
Cash flow from operations                              $256             $183
----------------------------------------------------------------------------

 
(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 first quarter report for 2013, including MD&A and
unaudited interim financial statements, as well as our first 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 2:30 p.m. MT
(4:30 p.m. ET) today to discuss first quarter 2013 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 "Brent Ward"
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 on the Investor Centre
section of TransAlta's website at http://www.transalta.com/investor-c
entre/events-presentations/webcasts-conference-calls.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 geothermal, wind, hydro,
natural gas and coal facilities in order to provide customers with a
reliable, low-cost source of power. For over 100 years, TransAlta has
been a responsible operator and a proud contributor to the
communities in which it works and lives. TransAlta has been selected
by Jantzi-Sustainalytics as one of Canada's Top 50 Socially
Responsible Companies since 2009 and is recognized globally for its
leadership on sustainability and corporate responsibility standards
by FTSE4Good. 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 legislative or regulatory developments,
competition, global capital markets activity, changes in prevailing
interest rates, currency exchange rates, inflation levels, commodity
prices 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 - Investor inquiries:
Brent Ward
Director, Corporate Finance and Investor Relations
Phone: 1-800-387-3598 in Canada and U.S.
investor_relations@transalta.com 
TransAlta Corporation - Media inquiries:
Stacey Hatcher
Senior Corporate Relations Advisor
Cell: 587-216-2242
Toll-free media number: 1-855-255-9184
Alternate local number: 403-267-2540
 
 
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