TransAlta announces record annual and fourth quarter results
- 2007 comparable1 earnings per share increased approximately 13 per cent to $1.31 versus $1.16 in 2006
- 2007 cash flow from operations was $847.2 million
- Fourth quarter 2007 comparable1 earnings per share of $0.51 versus $0.46 in the same period 2006
- Fourth quarter 2007 cash flow from operations was $192.5 million
CALGARY, Alberta (Feb. 1, 2008) – TransAlta Corporation (TransAlta) (TSX: TA; NYSE: TAC) today reported 2007 comparable earnings of $264.3 million ($1.31 per share) versus $233.8 million ($1.16 per share) in 2006. Strong production from Centralia Thermal along with improved pricing and lower fuel costs primarily drove year-over-year comparable double digit earnings growth. Included in comparable earnings is a mark-to-market loss of $28.9 million ($0.09 per share) in 2007 and a gain of $35.5 million ($0.12 per share) in 2006.
Net earnings for 2007, including one-time items, were $308.8 million ($1.53 per share) compared to $44.9 million ($0.22 per share) for 2006. 2007 net earnings include a one-time gain of approximately $66.1 million ($0.33 per share) resulting from the enactment of Bill C-28, which reduced the Canadian federal corporate income tax rate, and changes in our tax provisions. Also included is a $10.2 million ($0.05 per share) gain on the sale of equipment from Centralia Thermal. These gains were partially offset by a $28.2 million ($0.14 per share) charge related to a change in Mexican tax law. 2006 net earnings were impacted by a $153.6 million ($0.76 per share) after tax charge related to the decision to stop mining at TransAlta’s Centralia, Washington mine, an $84.4 million ($0.42 per share) charge related to the impairment of the Centralia Gas fired plant, and one time gains of $55.3 million ($0.27 per share) relating to Canadian tax changes.
Cash flow from operations for the year ended Dec. 31, 2007 was $847.2 million, compared to $489.6 million for the year ended Dec. 31, 2006. The increase in cash flow from operations in 2007 was driven by higher cash earnings and improved working capital. By comparison, in 2006, cash was consumed to build coal inventory at Centralia. Also included in 2007 cash flow from operations is a $185 million payment received Jan. 2, 2007 related to 2006 PPA revenues. This was partially offset by $115.5 million of 2007 revenues being received on Jan. 2, 2008. While there is variability in the timing of PPA cash flows, 12 months of revenue payments were received throughout 2007.
Steve Snyder, TransAlta’s President and CEO, said, “2007 was another strong year for TransAlta. We achieved a 13 per cent increase in comparable earnings per share and record annual cash flow. A key contributor to the increase in comparable earnings was our Generation business, which delivered strong returns primarily driven by increased gross margins from our Centralia Thermal operations and improving market conditions in our key markets of Alberta and the Pacific Northwest.
“As these results demonstrate, our strategy for creating shareholder value is working. We believe this strategy strikes an effective balance between dividends, share buybacks, portfolio optimization, and investment in future growth. We will continue our focus on strong execution. With a fuel diversified generation portfolio of assets, a strong balance sheet and an experienced team, we believe TransAlta is well positioned as a major western wholesale power generation company.”
In the fourth quarter 2007, TransAlta reported comparable earnings were $102.6 million ($0.51 per share) compared to $92.0 million ($0.46 per share) in the fourth quarter 2006. The increase in comparable earnings was driven by a $15.2 million increase in before mark-to-market gross margins from our Generation business due to higher production in Western and Eastern Canada, and increased prices and lower fuel costs at Centralia Thermal operations. Comparable earnings include $ 4.0 million and $35.5 million of mark-to-market gains in 2007 and 2006, respectively. Net earnings in the fourth quarter 2007 were $129.5 million ($0.64 per share) compared to a loss of $146.0 million ($0.72 per share) in 2006.
Cash flow from operations in the fourth quarter of 2007 was $192.5 million, an increase of $114.8 million compared to $77.7 million earned in the sam e quarter in 2006. The increase was driven by higher cash earnings in 2007 as well as improved working capital.
Fleet availability for the year was 87.2 per cent compared to 89.0 per cent in 2006. The decrease in availability is attributed to the planned derates at Centralia Thermal during the transition to third party Powder River Basin coal. Fleet availability adjusted for the Centralia Thermal derates was 90.5 per cent. Fleet availability for the fourth quarter increased to 91.8 per cent compared to 89.9 per cent in the fourth quarter of 2006 due to lower planned and unplanned outages. Excluding Centralia Thermal derates, availability for the quarter was 94.0 per cent.
Fourth Quarter and 12 Months Ended Dec. 31 2007 Highlights
All figures in millions unless otherwise stated.
Dec. 31, 2007
Dec. 31, 2006
Dec. 31, 2007
Dec. 31, 2006
|Gross margin ($MM)1||$434.9||$404.4||$1,544.0||$1,491.4|
|Operating income ($MM)1||$183.5||($171.3)||$541.1||$156.6|
|Net earnings ($MM)||$129.5||($146.0)||$308.8||$44.9|
|Comparable earnings ($MM)1||$102.6||$92.0||$264.3||$233.8|
|Basic & diluted earnings per share ($)||$0.64||($0.72)||$1.53||$0.22|
|Comparable earnings per share ($)||$0.51||$0.46||$1.31||$1.16|
|Cash flow from operations ($MM)||$192.5||$77.7||$847.2||$489.6|
1 Gross margin, operating income, and comparable earnings are not defined under Canadian GAAP. Refer to the non-GAAP financial measures section beginning on page 23 of the expanded news release for an explanation and reconciliation.
The complete fourth quarter and 2007 year-end report and unaudited financial statements, is available on the Investors section of our website.
TransAlta will hold a conference call and web cast at 9 a.m. MST (11 a.m. EST) today to discuss year-end and fourth quarter 2007 results. The call will begin with a short address by Steve Snyder, President and CEO, and Brian Burden, Executive Vice-President and CFO, 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 “Jennifer Pierce” as the moderator.
- For local Calgary participants – (403)-232-6311
- For local Toronto participants – (416)-883-0139
- Toll-free North American participants – 1-888-458-1598
- Participant pass code – 26326#
A link to the live Web cast 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 1-877-653-0545 with TransAlta pass code 603020#. A transcript will be posted on TransAlta’s website approximately one day after the conference call.M
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. We maintain a low-risk profile by operating a highly contracted portfolio of assets in Canada, the United States, Mexico and Australia. Our focus is to efficiently operate our coal-fired, gas-fired, hydro and renewable facilities in order to provide our customers with a reliable, low-cost source of power. For nearly 100 years, we’ve been a responsible operator and a proud contributor to the communities where we work and live.
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, and global capital markets activity, changes in prevailing 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.
For more information:
Senior Advisor, Media Relations
Phone: (403) 267-7330
Director, Investor Relations
Phone: (403) 267-7622
Fax: (403) 267-2590