Capstone Infrastructure Corporation Reports Strong First Quarter 2013 Performance

  Capstone Infrastructure Corporation Reports Strong First Quarter 2013

Business Wire

TORONTO -- May 13, 2013

Capstone Infrastructure Corporation (TSX: CSE; CSE.DB.A; CSE.PR.A)


  *Total revenue increased by 2.3% due to a higher regulated water rate at
    Bristol Water
  *Bristol Water delivered on its capital expenditure program and grew
    revenue by 6.1% while gross Adjusted EBITDA increased by 7.9%
  *Power segment achieved high availabilities and total production above
    long-term averages
  *Adjusted EBITDA decreased by 13.1% primarily due to lower ownership
    interest in Bristol Water
  *AFFO decreased by 8.5%, primarily reflecting higher debt principal
    payments and less interest income from Värmevärden

Capstone Infrastructure Corporation (TSX: CSE; CSE.DB.A; CSE.PR.A – the
"Corporation") today reported unaudited results for the first quarter of
fiscal 2013 ended March 31, 2013. The Corporation’s Management’s Discussion
and Analysis and unaudited consolidated financial statements are available at and on SEDAR at All amounts are
in Canadian dollars.

Financial Review

In millions of Canadian dollars or    Quarter ended Mar 31   
on a per share basis unless                                     Variance (%)
otherwise noted                        2013         2012
Revenue                                94.3         92.2      2.3
Net income                             15.9         16.6      (4.3)        
Adjusted EBITDA^1,2                    32.3         37.2      (13.1)
AFFO^1,3                               13.6         14.9      (8.5)
AFFO per share^1,3                     0.180        0.200     (10.0)
Dividends per share                    0.075        0.165     (54.5)
Payout ratio^1                         42      %     82     %   N/A

^1"Adjusted EBITDA", “Adjusted Funds from Operations”, and “Payout Ratio” are
non-GAAP financial measures and do not have any standardized meaning
prescribed by International Financial Reporting Standards (“IFRS”). As a
result, these measures may not be comparable to similar measures presented by
other issuers. Definitions of each measure are provided on pages 5 and 6 of
Management’s Discussion and Analysis with reconciliation to IRFS measures
provided on page 6.
^2While Bristol Water’s revenue and expenses are fully consolidated into
Capstone’s financial results, its Adjusted EBITDA was adjusted to reflect
Capstone’s 70% ownership interest, which was held between October 5, 2011 and
May 10, 2012, and subsequent 50% interest following the sale of a 20% interest
to ITOCHU Corporation on May 10, 2012.
^3Consolidated AFFO includes dividends received from Bristol Water, which is
more reflective of the cash flow available to Capstone from the operating
activities of Bristol Water.

"Our power and utilities businesses performed strongly in the first quarter.
The two main factors affecting our Adjusted EBITDA and AFFO were our reduced
interest in Bristol Water effective May 10, 2012, and higher debt principal
payments, respectively, compared with the same period last year," said Michael
Bernstein, President and Chief Executive Officer. "Operationally, our power
facilities achieved production slightly above long-term averages but below
production in the first quarter of 2012. Bristol Water benefited from higher
water rates and continued to advance its capital expenditure program.
Värmevärden benefited from price adjustments and improved plant availability.
During the quarter we also continued to work toward a new contract for
Cardinal and to evaluate various business development opportunities. With our
lower payout ratio, we expect to build up approximately $40 to $50 million in
internally-generated cash over 2013 and 2014 to reinvest in our company's

Financial Highlights

Revenue increased by 2.3%, or $2.1 million, over the same quarter in 2012.
This variance was mostly due to a higher regulated water rate, which increases
annually, at Bristol Water, and higher electricity sales at the Cardinal gas
cogeneration facility.

Total expenses in the first quarter increased by 3.2%, or $1.6 million, over
the same period last year primarily due to slightly higher operating expenses
at Bristol Water and increased fuel costs at Cardinal as a result of higher

Adjusted EBITDA was 13.1%, or $4.9 million, lower than in the same period last
year. Of this amount, $4.8 million was attributable to the Corporation's
reduced interest in Bristol Water effective May 10, 2012 and less interest
income received from Värmevärden following the recapitalization of the
business in March 2012. In addition, the Corporation's power segment produced
1.3% less electricity than in the same period last year.

AFFO was 8.5%, or $1.3 million, lower than in the first quarter last year.
This variance was largely due to lower overall power production, higher debt
principal payments and lower interest income from Värmevärden. These factors
were partially offset by a $1.6 million dividend received from Bristol Water,
which now pays dividends to its shareholders on a quarterly rather than
semi-annual basis.

Financial Performance Highlights by Segment

Power Infrastructure:

In millions of Canadian dollars unless  Quarter ended Mar 31    Variance (%)
otherwise noted                          2013         2012
Power generated (GWh)                    510.6        517.4     (1.3)    
Revenue                                  50.2         50.6      (0.9)    
Adjusted EBITDA                          23.4         24.6      (4.9)    
AFFO                                     16.1         18.8      (14.4)   

Revenue in the first quarter decreased by 0.9%, or $0.4 million, due to lower
electricity production as a result of less favourable weather conditions for
Erie Shores Wind Farm, the hydro power facilities, and Amherstburg Solar Park
than in the same period last year when resource availability was generally
better than average. In addition, Whitecourt limited its production during the
quarter in response to lower average power pool prices in Alberta. Whitecourt
also sold fewer renewable energy credits ("RECs") than in the same period last
year. These factors were partially offset by increased production and a higher
power rate at Cardinal.

Adjusted EBITDA for the quarter decreased by 4.9%, or $1.2 million, primarily
reflecting lower revenue compared with the same quarter last year. AFFO
declined by 14.4%, or $2.7 million, reflecting lower Adjusted EBITDA and
higher debt principal payments in 2013 as a result of the recapitalization of
the hydro power facilities in June 2012. In the first quarter, $2.7 million of
debt at the power facilities was repaid through scheduled amortization



In millions of Canadian dollars unless Quarter ended Mar 31                 
otherwise noted                                                 Variance (%)
                                       2013         2012                    
Water supplied (megalitres)            19,238       19,763    (2.7)
Revenue                                44.1         41.5      6.1          
Adjusted EBITDA before non-controlling 20.8         19.3      7.9
Adjusted EBITDA                        10.4         13.5      (22.9)
AFFO                                   1.6          —         N/A          

The Corporation initially acquired a 70% interest in Bristol Water on October
5, 2011 and subsequently sold a 20% indirect interest in the business on May
10, 2012.

Revenue increased by 6.1%, or $2.5 million, primarily due to the annual
regulated increase in water rates. Bristol Water's Adjusted EBITDA
contribution declined by 22.9%, or $3.1 million, reflecting the Corporation's
reduced interest in the business. During the quarter, Bristol Water paid a
dividend of $1.6 million to the Corporation.

In the first three months of 2013, Bristol Water made capital expenditures of
$36.6 million under its approximately $440 million capital program for the
current five-year asset management plan ("AMP5"), which concludes in March
2015. As at March 31, 2013, Bristol Water had cumulative capital expenditures
of $261 million over the AMP5 period, which was $38 million lower than
planned. Bristol Water completed more than $134 million in capital
expenditures in its fiscal year ended March 31, 2013, thereby reducing its
expenditure shortfall by 48% as at year end. Bristol Water expects to fully
complete its AMP5 capital program by the end of the regulatory period.

District Heating

In millions of Canadian dollars unless  Quarter ended Mar 31    Variance (%)
otherwise noted                          2013          2012
Heat production (GWh)                    432           392      10.2     
Interest income                          0.7           1.4      (48.3)   
Adjusted EBITDA and AFFO                 0.7           1.4      (48.3)   

During the first quarter of 2013, Värmevärden paid $0.7 million of interest
income to the Corporation compared with $1.4 million of interest income in the
first quarter last year. The variance reflected the balance outstanding on the
shareholder loan receivable as a result of the return of approximately $48
million in capital from Värmevärden in March 2012.

Financial Position
As at March 31, 2013, the Corporation had cash and cash equivalents of $43.3
million, including $27.6 million from the power segment and $11.8 million from
Bristol Water. Bristol Water has an additional $106.4 million in credit
capacity to support its capital expenditure program. Approximately $19.8
million of the Corporation’s total cash and cash equivalents is available for
general corporate purposes. As at March 31, 2013, the Corporation’s debt to
capitalization ratio was 61.5%.

The Corporation expects continuing stable performance from its power
generation and utilities businesses. Adjusted EBITDA in 2013 is expected to be
approximately $110 million to $120 million, which, while consistent with 2012
performance, represents an approximately $6 million increase in Adjusted
EBITDA over 2012 on a pro forma basis had the Corporation held its 50%
interest in Bristol Water for all of 2012.

The Corporation's 2013 outlook reflects the following assumptions:

  *A lower average effective gas transportation toll in 2013 of $1.95 per
    gigajoule ("GJ") compared with $2.24 per GJ in 2012;
  *Increased business development activity compared with 2012, which is
    expected to result in higher corporate costs consistent with historical
    levels; and
  *Modest overhead costs related to power development activities.

On March 27, 2013, the National Energy Board ("NEB") announced its decision to
fix multi-year tolls on TransCanada's ("TCPL") Mainline. On May 1, 2013, TCPL
submitted its compliance filing indicating the tolls that will take effect on
July 1, 2013. Based on this new information, Capstone has revised its outlook
for gas transportation tolls and now expects to pay a blended rate of $1.95
per GJ in 2013 and $1.65 per GJ in 2014. Also on May 1, 2013, TCPL filed an
application for review and variance. The outcome of this application,
including the toll level and effective date for the new toll, remains

A detailed outlook for the Corporation's power, utilities and corporate
segments is available on pages 12 to 16 of the quarterly report. The
Corporation's strategic priorities for 2013 include:

Securing a new power purchase agreement for Cardinal.
With the selection of a new Premier and Cabinet in Ontario in February, the
Corporation is actively in discussions with the Ontario Power Authority
("OPA") with the goal of achieving a fair, long-term solution for Cardinal
that recognizes the value of the facility and its industrial, economic, social
and community importance.

Maximizing the performance of its existing businesses.
The Corporation continues to focus on further enhancing the operational
performance of its businesses, which includes preventive maintenance, detailed
planning for capital expenditures that boost value, and finding ways to
increase cash flow such as the sale of RECs by Whitecourt.

Pursuing new investment opportunities.
With a stronger balance sheet, the Corporation is identifying a range of
growth opportunities, primarily concentrating its business development efforts
on Canada, the United States, the United Kingdom, Western Europe and
Australia, including operating infrastructure businesses and development
opportunities that offer an appropriate risk-adjusted rate of return.

Dividend Declarations

The Board of Directors today declared a quarterly dividend of $0.075 per
common share on the Corporation's outstanding common shares for the quarter
ending June 30, 2013. The dividend will be payable on July 31, 2013 to
shareholders of record at the close of business on June 28, 2013.

The Board of Directors also declared a dividend on its Cumulative 5-Year Rate
Reset Preferred Shares, Series A (the "Preferred Shares") of $0.3125 per
Preferred Share to be paid on or about July 31, 2013 to shareholders of record
at the close of business on July 15, 2013. The dividend on the Preferred
Shares covers the period from May 1, 2013 to July 31, 2013.

^1See Notice to Readers

In respect of the Corporation’s July 31, 2013 common share dividend payment,
the Corporation will issue common shares in connection with the reinvestment
of dividends to shareholder enrolled in the Corporation’s Dividend
Reinvestment Plan. The price of common shares purchased with reinvested
dividends will be the previous five-day volume weighted average trading share
price on the Toronto Stock Exchange, less a 5% discount.

The dividends paid by the Corporation on its common shares and the Preferred
Shares are designated "eligible" dividends for purposes of the Income Tax Act
(Canada). An enhanced dividend tax credit applies to eligible dividends paid
to Canadian residents.

A distribution of $0.075 per unit will also be paid on July 31, 2013 to
holders of record on June 28, 2013 of Class B Exchangeable Units of MPT LTC
Holding LP, which is a subsidiary entity of the Corporation.

Dividend Reinvestment Plan
Learn more about the Corporation’s Dividend Reinvestment Plan ("DRIP") at

Q1 Conference Call and Webcast
The Corporation will hold a conference call and webcast (with accompanying
slides) on Tuesday, May 14, 2013 at 8:30 a.m. EDT to discuss first quarter
results. To listen to the call from Canada or the United States, dial
1-800-319-4610. If calling from elsewhere, dial +1-604-638-5340. A replay of
the call will be available until May 28, 2013. For the replay, from Canada or
the United States, dial 1-800-319-6413 and enter the code 1385#. From
elsewhere, dial +1-604-638-9010 and enter the code 1385#. The event will be
webcast live with an accompanying slide presentation on the Corporation’s
website at

Annual General Meeting of Shareholders
The Corporation will hold its Annual General Meeting ("AGM") of Shareholders
on Tuesday, June 18, 2013 at 10 a.m. EDT at the TMX Broadcast Centre Gallery,
located at 130 King Street West in Toronto. The AGM will also be webcast live
with accompanying slides at

About Capstone Infrastructure Corporation
Capstone Infrastructure Corporation’s mission is to build and responsibly
manage a high quality portfolio of infrastructure businesses in Canada and
internationally in order to deliver a superior total return to shareholders by
providing reliable income and capital appreciation. The Corporation’s
portfolio currently includes investments in gas cogeneration, wind, hydro,
biomass and solar power generating facilities, representing approximately 370
MW of installed capacity, a 33.3% interest in a district heating business in
Sweden, and a 50% interest in a regulated water utility in the United Kingdom.
Please visit for more information.

Notice to Readers
Certain of the statements contained within this document are forward-looking
and reflect management's expectations regarding the future growth, results of
operations, performance and business of Capstone Infrastructure Corporation
(the “Corporation”) based on information currently available to the
Corporation. Forward-looking statements and financial outlook are provided for
the purpose of presenting information about management's current expectations
and plans relating to the future and readers are cautioned that such
statements may not be appropriate for other purposes. These statements and
financial outlook use forward-looking words, such as “anticipate”, “continue”,
“could”, “expect”, “may”, “will”, “estimate”, “plan”, “believe” or other
similar words. These statements and financial outlook are subject to known and
unknown risks and uncertainties that may cause actual results or events to
differ materially from those expressed or implied by such statements and
financial outlook and, accordingly, should not be read as guarantees of future
performance or results. The forward-looking statements and financial outlook
within this document are based on information currently available and what the
Corporation currently believes are reasonable assumptions, including the
material assumptions set out in the management's discussion and analysis of
the results of operations and the financial condition of the Corporation
(“MD&A”) for the year ended December 31, 2012 under the heading “Results of
Operations”, as updated in subsequently filed MD&A of the Corporation (such
documents are available under the Corporation's profile on

Other potential material factors or assumptions that were applied in
formulating the forward-looking statements and financial outlook contained
herein include or relate to the following: that the business and economic
conditions affecting the Corporation's operations will continue substantially
in their current state, including, with respect to industry conditions,
general levels of economic activity, regulations, weather, taxes and interest
rates; that the power infrastructure facilities will experience normal wind,
hydrological and solar irradiation conditions, and ambient temperature and
humidity levels; an effective TransCanada pipeline ("TCPL") gas transportation
toll of approximately $1.95 per gigajoule in 2013; that there will be no
material change in the level of gas mitigation revenue historically earned by
the Cardinal facility; that there will be no material changes to the
Corporation's facilities, equipment or contractual arrangements, no material
changes in the legislative, regulatory and operating framework for the
Corporation's businesses, no delays in obtaining required approvals, no
material changes in rate orders or rate structures for the power
infrastructure facilities, Värmevärden or Bristol Water, no material changes
in environmental regulations for the power infrastructure facilities,
Värmevärden or Bristol Water and no significant event occurring outside the
ordinary course of business; that the amendments to the regulations governing
the mechanism for calculating the Global Adjustment (which affects the
calculation of the direct customer rate ("DCR") escalator under the power
purchase agreement ("PPA") for the Cardinal facility and price escalators
under the PPAs for the hydro power facilities located in Ontario) will
continue in force; that there will be no material change to the accounting
treatment for Bristol Water's business under International Financial Reporting
Standards, particularly with respect to accounting for maintenance capital
expenditures; that there will be no material change to the amount and timing
of capital expenditures by Bristol Water; that there will be no material
changes to the Swedish Krona to Canadian dollar and British pound to Canadian
dollar exchange rates; and that Bristol Water will operate and perform in a
manner consistent with the regulatory assumptions underlying asset management
plan 5 ("AMP5"), including, among others: real and inflationary increases in
Bristol Water's revenue, Bristol Water's expenses increasing in line with
inflation, and capital investment, leakage, customer service standards and
asset serviceability targets being achieved.

Although the Corporation believes that it has a reasonable basis for the
expectations reflected in these forward-looking statements and financial
outlook, actual results may differ from those suggested by the forward-looking
statements for various reasons, including: risks related to the Corporation's
securities (dividends on common shares and preferred shares are not
guaranteed; volatile market price for the Corporation's securities;
shareholder dilution; and convertible debentures credit risk, subordination
and absence of covenant protection); risks related to the Corporation and its
businesses (availability of debt and equity financing; default under credit
agreements and debt instruments; geographic concentration; foreign currency
exchange rates; acquisitions and development; environmental, health and
safety; changes in legislation and administrative policy; and reliance on key
personnel); risks related to the Power Infrastructure Facilities (power
purchase agreements; operational performance; fuel costs and supply; contract
performance; land tenure and related rights; environmental; regulatory
environment); risks related to Bristol Water (Ofwat price determinations;
failure to deliver capital investment programs; economic conditions;
operational performance; failure to deliver water leakage target; service
incentive mechanism ("SIM") and the serviceability assessment; pension plan
obligations; regulatory environment; competition; seasonality and climate
change; and labour relations); and risks related to Värmevärden (operational
performance; fuel costs and availability; industrial and residential
contracts; environmental; regulatory environment; and labour relations).

The assumptions, risks and uncertainties described above are not exhaustive
and other events and risk factors could cause actual results to differ
materially from the results and events discussed in the forward-looking
statements and financial outlook. The forward-looking statements and financial
outlook within this document reflect current expectations of the Corporation
as at the date of this document and speak only as at the date of this
document. Except as may be required by applicable law, the Corporation does
not undertake any obligation to publicly update or revise any forward-looking
statements and financial outlook.


Capstone Infrastructure Corporation
Sarah Borg-Olivier, (416) 649-1325
Senior Vice President, Communications
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