TransAlta Provides Update On COVID-19 Implemented Measures
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) wishes to inform all its stakeholders of the measures that have been implemented to ensure the safety of its employees and to ensure that its facilities remain fully operational to meet the essential power demands of our customers.
The health and safety of our employees, contractors and communities is paramount during this challenging time prompted by the COVID-19 pandemic,- said Dawn Farrell, President and Chief Executive Officer of the Company. Our focus remains on generating essential electricity across Canada, the United States and Australia to support our customers needs, including the needs of other essential service providers. Financially, we are in a solid position and have strong visibility to cash flow throughout 2020 due to our contracts and hedges. I want to thank all our employees and their families for adapting quickly during this unprecedented time and ensuring our services continue without interruption.
Safety, health and wellness of employees are a top priority
As early as March 6, employees who could work remotely from home have been doing so. TransAlta formally implemented its business continuity plan on March 9 which focused on ensuring employees operating and maintaining our facilities, who are not able to work remotely, continue to remain healthy. This plan includes health screening, enhanced cleaning arrangements, travel bans, revised schedules, contingent work teams and the reorganization of processes and procedures to limit contact with other employees and contractors on-site.
The Company continuously monitors government-recommended health measures to safeguard the health and well-being of its employees and adjusts its continuity plan as needed for the continued delivery of essential services to customers and communities.
Focus on Continued Operations
Currently, all of our facilities remain fully operational and capable of meeting our customers needs. We are monitoring recommendations by the public health authorities related to COVID-19 in all our operating regions and are adjusting operational requirements as required. Considering the importance of social distancing and other recommended health practices, we have modified our operating procedures and implemented restrictions to non-essential access to our facilities to support continued operations through the pandemic.
Strong Financial Position and Liquidity Levels
TransAlta continues to be in a strong financial position with no near-term liquidity issues. At the end of the first quarter, the Company had $1.7 billion of liquidity, including approximately $330 million in cash. The Company is also scheduled to receive the $400 million second tranche of the Brookfield investment in the fourth quarter. We continue to have access to additional capital through potential project financing of existing assets that are currently unlevered.
The Company has sufficient existing liquidity available to meet the upcoming debt maturity which is due November 2020. The next major debt repayment is scheduled for November 2022.
The Company has approximately 50 per cent of its baseload merchant generation in Alberta hedged in the $52/MWh range for the remainder of 2020.
TransAlta remains confident in its ability to fund both the preferred and common dividends with internally generated cash. The Company was active under its share buyback program during the first quarter prior to entering our blackout period which began on April 1. We will continue to monitor the financial markets and assess the timing of further repurchases, subject to blackout periods.
The Company continues to work with and serve all our customers and counterparties under the terms of their contracts. We have not experienced interruptions to service requirements. Electricity and steam supply continue to remain a critical service requirement to all our customers and has been deemed an essential service in our jurisdictions.
Our highly diversified asset portfolio, by both fuel type and operating region, provide stability in our cash flows and highlight the strength of our long-term contracted asset base.
Strategic Execution on Track
The impacts from the COVID-19 pandemic and resulting slowdown in the Alberta economy have not altered the Company’s strategy. We remain focused on our natural gas conversion strategy in the province and continue to progress on our growth initiatives.
At this time, the Company continues to progress each of its construction projects currently underway and further updates in respect to the construction timelines will be provided as more information becomes available.
We continue to assess the financial impacts resulting from the COVID-19 pandemic and the current and future outlook on global oil prices. There continues to be significant uncertainty due to the COVID-19 pandemic and we will continue to closely monitor developments and will provide updates if material changes to the Company’s business, operations or capital are reasonably likely to arise.
About TransAlta:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydroelectric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and has been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. TransAlta is proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit its web site at transalta.com.
Cautionary Statement Regarding Forward Looking Information
This News Release includes forward-looking information, within the meaning of applicable Canadian securities laws, and forward-looking statements, within the meaning of applicable United States securities laws, including the United States Private Securities Litigation Reform Act of 1995 (collectively referred to herein as forward-looking statements). All forward-looking statements are based on our beliefs as well as assumptions based on information available at the time the assumption was made and on management’s experience and perception of historical trends, current conditions, results and expected future developments, as well as other factors deemed appropriate in the circumstances. Forward-looking statements are not facts, but only predictions and generally can be identified by the use of statements that include phrases such as will, expect, intend, plan, potential, enable, continue or other comparable terminology. These statements are not guarantees of our future performance, events or results and are subject to a number of significant risks, uncertainties and other important factors that could cause our actual performance, events or results to be materially different from that set out in the forward-looking statements. In particular, this News Release contains forward-looking statements including, but not limited to, statements relating to: our facilities remaining fully operational; our operating procedures; the continued delivery of essential services to customers and communities; the Company’s future financial position and near-term liquidity; the closing of the $400 million second tranche of the Brookfield investment in the fourth quarter; sufficient existing liquidity to meet the debt maturity due November 2020; ability to fund dividends with internally generated cash; stability in cash flows and strength of our long-term contracted asset base; the impacts from the COVID-19 pandemic and resulting slowdown in the Alberta economy not altering the Company’s strategy; the natural gas conversion strategy and our growth initiatives; and no material delays in our construction projects currently underway. The material factors and assumptions used in the preparation of the forward-looking statements contained herein, which may prove to be incorrect, include, but are not limited to, the scope of the COVID-19 pandemic and duration thereof; the market conditions and the other assumptions set forth herein and in our Annual Information Form and Management’s Discussion and Analysis for the year end dated December 31, 2019, filed under the Company’s profile with the Canadian securities regulators on www.sedar.com and the U.S. Securities and Exchange Commission on www.sec.gov. By their nature, forward-looking statements are not guarantees of future performance, events, results or actions and are subject to a number of significant risks, uncertainties, assumptions and factors that could cause our actual plans, performance, results or outcomes to differ materially from the forward-looking statement. Factors that may adversely impact what is expressed or implied by forward-looking statements contained in this News Release include, but are not limited to, risks relating to: a significant expansion in COVID-19 restricting or prohibiting the operation of the Company’s facilities or significantly impacting the Company’s supply chain; the duration and extent of the relatively low global oil prices, and its impact on the Province of Alberta; the forecasted electricity load in the Province of Alberta being lower than expected resulting in potentially lower power prices within the Province; the global market and economic conditions and fluctuations in commodity prices; risk relating to general market conditions and the ability to raise capital on economic terms; risks relating to attracting and retaining highly skilled employees; ability to retain key personnel; the potential for and effects of labour disputes or other unanticipated difficulties with or shortages of labour or interruptions in production; the inherent uncertainty of construction projects, including potential for unexpected costs or delays; risk relating to litigation and regulatory developments; and other risk factors contained in the Company’s Annual Information Form and Management’s Discussion and Analysis for the year end dated December 31, 2019. Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on them, which reflect the Company’s expectations only as of the date hereof. Forward-looking statements do not take into account the effect that transactions or non-recurring or other special items announced or occurring after the statements are made may have on the Company’s business. For example, they do not include the effect of business dispositions, acquisitions, other business transactions, asset write-downs, asset impairment losses, or other charges announced or occurring after forward-looking statements are made. The forward-looking statements included in this News Release are made only as of the date hereof and we do not undertake to publicly update these forward-looking statements to reflect new information, future events or otherwise, except as required by applicable laws. In light of these risks, uncertainties and assumptions, the forward-looking statements might occur to a different extent or at a different time than we have described or might not occur at all.
TransAlta Provides Update On COVID-19 Implemented Measures
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) today announced that it has adopted certain changes to its Stock Option Plan.
In TransAlta’s management information circular dated March 9, 2020 (the Information Circular) for its upcoming annual and special meeting of shareholders scheduled to be held on April 21, 2020 (the Meeting), the Company disclosed that it is seeking approval by its shareholders at the Meeting to amend its Stock Option Plan solely to increase the number of shares available for issuance pursuant to options granted under the Stock Option Plan. In the meantime, in order to align features of the Stock Option Plan with current best governance and market practices, the Company has adopted certain changes to the Stock Option Plan’s amendment provisions to further limit the Board of Director’s ability to make amendments without shareholder approval in the future. As a result of these changes, the amendment provisions in the Stock Option Plan require that majority shareholder approval be obtained for any changes to the Stock Option Plan (in addition to those enumerated items already requiring shareholder approval) that would: (i) reduce the exercise price of (or any cancellation and re-grant of an option that would reduce the exercise price of) options or other entitlements held by non-insiders; (ii) extend the term of options held by non-insiders beyond their original expiry date; (iii) expand the Stock Option Plan’s eligibility criteria or participation limits (including amendments to the definition of participant) applicable to non-employee directors; and (iv) permit options to be transferred or assigned other than for normal estate settlement purposes. At the Meeting, shareholders will still be asked to approve an ordinary resolution to increase the number of shares available for issuance under the Stock Option Plan, as described in the Information Circular. TransAlta’s Board of Directors continues to unanimously recommend that shareholders vote FOR the increased allocation under the Stock Option Plan, which will only become effective if approved by shareholders at the Meeting.
A copy of the updated Stock Option Plan, which reflects the changes described above, will be available under our profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov. Further details in respect of the Meeting are available in the Information Circular and related proxy materials, which can be found under our profile on SEDAR at www.sedar.com and on EDGAR at www.sec.gov.
About TransAlta:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and has been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. TransAlta is proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit its website at transalta.com.
TransAlta Provides Update On COVID-19 Implemented Measures
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) today issued a notice (the Notice) to holders of common shares (Shareholders) and filed the Notice along with its management information circular (the Circular) in connection with its annual and special meeting of Shareholders to be held on Tuesday, April 21, 2020 at 10:30 a.m. (Calgary Time) (the Meeting). A copy of the Notice and Circular can be downloaded from the Company’s SEDAR profile at www.sedar.com and the Company’s EDGAR profile at www.sec.gov/edgar.shtml. The Notice and Circular are also available at TransAlta’s website. The Notice provides that the Meeting will be held in a virtual-only meeting format.
TransAlta holds safety as a core value. The Company has been carefully monitoring the outbreak of the novel coronavirus (COVID-19) and is proactively implementing measures to prioritize the health and well-being of its employees, customers, suppliers, partners, shareholders, communities and other stakeholders, while ensuring continuity in the provision of its critical services in each of Canada, the United States and Australia. In light of the rapidly evolving COVID-19 public health emergency and to mitigate against its risks, the Meeting to be held on Tuesday, April 21, 2020 at 10:30 a.m. (Calgary Time) will be held in a virtual-only meeting format. Shareholders will not be able to attend the Meeting physically. A virtual-only meeting format is being adopted in response to the COVID-19 situation to enfranchise and give all Shareholders an equal opportunity to participate at the Meeting regardless of their geographic location or the particular constraints, circumstances or risks they may be facing as a result of COVID-19. TransAlta is not aware of any items of business to be brought before the Meeting other than those described in the Circular.
The Meeting can be accessed by logging in online at https://web.lumiagm.com/223766460. As described in the Circular, registered Shareholders are entitled to participate at the Meeting if they held their common shares as of the close of business on March 5, 2020, the record date. Registered Shareholders who wish to appoint a third-party proxyholder other than the named TransAlta proxy nominees can do so by printing the proxyholder’s name in the space provided in the enclosed form of proxy. Non-registered (beneficial) Shareholders who wish to vote at the Meeting will be required to appoint themselves as proxyholder in advance of the Meeting by writing their own name in the space provided on the voting instruction form provided by their intermediary, generally being a bank, trust company, securities broker, trustee or other institution.
Registered Shareholders and duly appointed proxyholders (including beneficial Shareholders who have duly appointed themselves as proxyholders) who participate at the Meeting online will be able to listen to the Meeting, ask questions and vote, all in real time, provided that they are connected to the internet. Guests, including non-registered Shareholders who have not duly appointed themselves as proxyholder, can log in to the Meeting as set out below. Guests can listen to the Meeting but will not able to communicate or vote. In all cases, Shareholders must follow the instructions set out in their applicable proxy or voting instruction forms and those set out in the Notice, which are also available online at transalta.com/financial-and-annual-reports/management-proxy-circulars. If you have questions regarding your ability to participate or vote at the Meeting, please contact Computershare at 1-800-564-6253.
One item of business being put forward to Shareholders for confirmation at this year’s Meeting is an amendment and restatement of the Company’s Amended and Restated By-law No.1, which sets out the general rules governing the business and affairs of the Company. The changes are intended to modernize the Company’s corporate governance practices and align them more closely with other leading Canadian public companies governed by the Canada Business Corporations Act (CBCA). As a best governance practice, the Company adopted the amendments to take effect only if and upon receiving Shareholder confirmation at the Meeting. However, in light of the COVID-19 global pandemic and the need to shift to a virtual-only meeting format to address the concerns it has created, the Company’s Board of Directors subsequently approved the immediate adoption of the amendment and restatement of the Company’s Amended and Restated By-law No.1 to the extent reasonably necessary to permit the holding of the Meeting in a virtual-only format under the CBCA. The amendments are discussed in the Meeting materials and accessible electronically. The by-law amendments will be effective only for this year’s Meeting and will cease to have effect if Shareholders do not confirm the amendments at the Meeting, all as described in the Notice.
TransAlta’s first priority is always the well-being of its employees, customers, suppliers, partners, Shareholders, communities and other stakeholders. The Company’s thoughts are with those already impacted by COVID-19 and TransAlta acknowledges, with gratitude, the efforts of those individuals on the front lines confronting this public health crisis.
About TransAlta:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and has been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. TransAlta is proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit its website at transalta.com.
Forward Looking Statements:
This news release contains forward looking statements within the meaning of applicable securities laws.The use of any of the words expect, anticipate, continue, estimate, may, will, project, should, propose, plans, intends and similar expressions are intended to identify forward looking information or statements. More particularly, and without limitation, this news release contains forward looking statements and information relating to: the Meeting and the items of business to be raised at the Meeting. These forward looking statements are based on a number of assumptions considered by the Company to be reasonable as of the date of this news release, including, but not limited to, the assumption that no new shareholder business will be proposed at the Meeting. The forward looking statements are subject to a number of risks and uncertainties that may cause actual performance, events or results to differ materially from those contemplated by the forward looking statements, which include risks relating to the impact and scope of COVID-19. Readers are cautioned not to place undue reliance on this forward looking information, which is given as of the date it is expressed in this news release. The Company undertakes no obligation to update or revise any forward looking information except as required by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from those in the forward looking information, refer to the Company’s Annual Report and Management’s Discussion and Analysis filed under the Company’s profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission at www.sec.gov.
TransAlta Provides Update On COVID-19 Implemented Measures
TransAlta Corporation (TransAlta) (TSX: TA) (NYSE: TAC) announced today the acquisition of a contracted cogeneration asset from two private companies for a purchase price of approximately US$27 million, subject to working capital adjustments. The asset is a 29 MW cogeneration facility in Michigan which is contracted under a long-term power purchase agreement and steam sale agreement for approximately six years with high quality counterparties.
The acquisition marks our first U.S. cogeneration project and aligns with our strategy of growing our on-site generation business, diversifying our cogeneration portfolio, and increasing the pipeline of assets for potential future drop-downs into TransAlta Renewables,- said Dawn Farrell, President and Chief Executive Officer of TransAlta. The expansion into new geographic markets further enhances our position as a leader in behind the fence generation and provides potential for future opportunities in the U.S. cogeneration space.
The cogeneration facility, which comprises a single GE LM2500 gas turbine and an ABB steam turbine, has been operational since 1991. The electricity and steam output of the facility are fully contracted providing consistent, predictable revenues through 2026. The acquisition will be funded with cash on hand.
Investment Highlights:
Attractive cash-on-cash yield and project return acquisition metrics;
Expands TransAlta’s platform in the U.S. and is an entry into the U.S cogeneration space;
Potential drop-down candidate to TransAlta Renewables Inc.;
Long-term contracted cash flows with high quality counterparties; and
Provides further geographic, technology and counterparty diversification.
The acquisition is subject to customary regulatory approvals and is expected to close in the second quarter of 2020.
About TransAlta:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and has been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. TransAlta is proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit its website at transalta.com.
Forward Looking Statements:
This news release contains forward looking statements within the meaning of applicable securities laws.The use of any of the words expect, anticipate, continue, estimate, may, will, project, should, propose, plans, intends and similar expressions are intended to identify forward looking information or statements. More particularly, and without limitation, this news release contains forward looking statements and information relating to: the completion of the acquisition of the cogeneration facility and the associated benefits therefrom; expectations and plans for future growth, including expansion into new markets; and the potential for a drop-down of the assets to TransAlta Renewables Inc. These forward looking statements are based on a number of assumptions considered by the Company to be reasonable as of the date of this news release, including, but not limited to, the following: unanticipated impacts relating to novel coronavirus; no significant changes to applicable laws and regulations, including any tax and regulatory changes; no material adverse impacts to the investment and credit markets; and assumptions regarding our current strategy and priorities, including as it pertains to our growth strategy and relationship with TransAlta Renewables. The forward looking statements are subject to a number of risks and uncertainties that may cause actual performance, events or results to differ materially from those contemplated by the forward looking statements, which include: failure to satisfy the conditions to the closing of the transaction; changes in the market place in which the cogeneration facility is located; failure to proceed with the drop-down to TransAlta Renewables Inc.; changes to the operational characteristics of the off-takers under the long-term power purchase agreement; changes in the law or political developments; and other risk factors contained in the Company’s Annual Information Form and Management’s Discussion and Analysis for the year end dated December 31, 2019, filed under the Company’s profile with the Canadian securities regulators on www.sedar.com and the U.S. Securities and Exchange Commission on www.sec.gov. Readers are cautioned not to place undue reliance on this forward looking information, which is given as of the date it is expressed in this news release. The Company undertakes no obligation to update or revise any forward looking information except as required by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from those in the forward looking information, refer to the Company’s Annual Report and Management’s Discussion and Analysis filed under the Company’s profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission at www.sec.gov.
TransAlta Provides Update On COVID-19 Implemented Measures
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) announced today that the Company, with its partner Tidewater Midstream & Infrastructure Ltd. (Tidewater), has entered into a Letter of Intent to sell the Pioneer Pipeline to NOVA Gas Transmission Ltd. (NGTL), a wholly-owned subsidiary of TC Energy, for a purchase price of CDN $255 million. As part of the transaction, NGTL intends to integrate the Pioneer Pipeline into its natural gas pipeline infrastructure in Alberta.
The benefits of the transaction to TransAlta include:
Access to NGTL’s highly liquid natural gas network and gas trading hub;
Additional reliability and flexibility of having two pipelines delivering natural gas to the Company’s power stations;
Access to a broad and diversified group of gas producers and resource basins; and
Cash proceeds that can be used to fund the Company’s natural gas conversion program, or for other purposes.
As part of the transaction, TransAlta will enter into long-term delivery transportation agreements with NGTL, bringing the total of new and existing natural gas pipeline transportation service to 400 TJ/day by 2023. TransAlta’s current commitments, including the 139 TJ/day with Tidewater, will remain in place until the closing of the transaction.
Tidewater has been an exceptional partner that was able to build the Pioneer Pipeline well ahead of schedule, allowing us to significantly reduce our carbon emissions and costs,- said Dawn Farrell, President and Chief Executive Officer of the Company. Going forward, we are excited to work with TC Energy to meet our transportation requirements as we continue to execute our clean energy strategy, which will support our goals as a leader in clean electricity generation.
The transaction is subject to entering into a Purchase and Sale Agreement, and customary regulatory approvals.
About TransAlta:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydroelectric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and has been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. TransAlta is proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit its web site at transalta.com.
Cautionary Statement Regarding Forward Looking Information
This news release contains forward looking statements within the meaning of applicable securities laws. The use of any of the words expect, anticipate, continue, estimate, may, will, project, should, propose, plans, intends and similar expressions are intended to identify forward looking information or statements. More particularly, and without limitation, this news release contains forward looking statements and information relating to the Pioneer Pipeline; sale of the Pioneer Pipeline to NGTL; regulatory approvals; execution of the definitive agreements; NGTL’s intention to integrate the Pioneer Pipeline into its natural gas pipeline infrastructure in Alberta; the potential benefits of the transaction; and estimated natural gas pipeline transportation service with NGTL. These forward looking statements are based on a number of assumptions considered by the Company to be reasonable as of the date of this news release, including, but not limited to, the following: no significant changes to applicable laws and regulations, including any tax and regulatory changes; no significant changes to our relationship with Tidewater; and assumptions regarding our current strategy and priorities, including as it pertains to ournatural gas conversion program and the clean energy strategy. The forward looking statements are subject to a number of risks and uncertainties that may cause actual performance, events or results to differ materially from those contemplated by the forward looking statements, which include: disruptions in the source of fuels, including natural gas required for the natural gas conversions and repowering strategies; changes in economic and market conditions; changes in tax, environmental, regulatory and other laws and regulations; 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 Management’s Discussion and Analysis dated December 31, 2019, filed under the Company’s profile with the Canadian securities regulators on www.sedar.com. Readers are cautioned not to place undue reliance on this forward looking information, which is given as of the date it is expressed in this news release. The Company undertakes no obligation to update or revise any forward looking information except as required by law.
TransAlta Provides Update On COVID-19 Implemented Measures
Fourth Quarter 2019 Highlights
Generated $121 million or $0.43 per share of free cash flow (FCF) in the quarter compared to $98 million or $0.34 per share of FCF for the same period in 2018, a 26 per cent increase;
Advanced our Clean Energy Investment Plan by commissioning 119 MW of new wind generation and acquiring two gas turbines for the Sundance 5 repowered combined cycle unit project;
Entered into an agreement to construct and own a new 40 MW cogeneration facility; and
Returned $41 million of capital to shareholders in the fourth quarter through the repurchase and cancellation of 4,583,100 common shares at an average price of $8.95 per share through our normal course issuer bid (NCIB) program.
Full Year 2019 Highlights
Achieved exceptional financial results with FCF of $379 million or $1.34 per share for the full year which was five per cent above 2018 on a per share basis, adjusting for one-time PPA Termination Payments in both years;
Received $56 million, plus GST and interest on our successful arbitration related to the Sundance B and C PPA terminations;
Generated total FCF of $435 million or $1.54 per share for full year 2019;
Achieved adjusted availability of 90.0 per cent in the year;
Announced transformative strategic investment by Brookfield Renewable Partners with receipt of the first $350 million tranche of the $750 million investment advancing our coal-to-gas conversion strategy and accelerating our return of capital to shareholders through our NCIB;
Announced our Clean Energy Investment Plan and timing for our conversions and repowerings;
Entered into an agreement to purchase a 49 per cent interest in the Skookumchuck wind project;
Transported first gas through the Pioneer pipeline four months ahead of schedule and commenced firm throughput in November;
Returned $68 million of capital to shareholders with the repurchase and cancellation of 7,716,300 common shares at an average price of $8.80 per share through our NCIB program;
Reduced our carbon emissions by approximately 200,000 tonnes compared to 2018, representing a one per cent reduction;
Safety results with a Total Incident Frequency (TIF) rate of 1.12, representing over a 40 per cent reduction to 2018; and
In January of 2020, increased the common share dividend by 6.25 per cent.
Other Highlights
Announced 2020 Outlook in January
Comparable EBITDA range of $925 million to $1,000 million, up four per cent from 2019 at the mid-point;
FCF range of $325 million to $375 million; and
Sustaining capital range of $170 to $200 million.
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) today reported its fourth quarter and full year 2019 financial results, with comparable EBITDA(1,2) of $928 million for the full year. Funds from operations (FFO)(1,2) decreased nine per cent to $701 million for the full year compared to $770 million in 2018. FCF(1,2) for the full year was $379 million, representing a three per cent increase over 2018. These financial results exclude the one-time payments in both periods for the early termination of the Sundance B and C Power Purchase Arrangements (the PPA Termination Payments). The strong financial results for the year highlight the exceptional performance of the business when considering the expected free cash flow decline as a result of the expiry of the Mississauga contract and lower scheduled payments on the Poplar Creek contract. With the inclusion of the PPA Termination Payments, we earned $435 million of FCF or $1.54 per share.
Comparable EBITDA decreased by $177 million compared to 2018. After adjusting for the PPA Termination Payments in 2019 and 2018, comparable EBITDA decreased by $76 million for the year ended December 31, 2019, compared to 2018. This decrease was expected as a result of the expiry of the Mississauga contract and lower scheduled payments on the Poplar Creek contract. Strong performance at the Canadian Coal and Energy Marketing segments as well as lower Corporate costs have significantly offset this expected decrease. Comparable EBITDA for the year ended December 31, 2019 was negatively impacted by the unplanned outage at US Coal during the first quarter of 2019.
OM&A expense for the year ended December 31, 2019 decreased by $40 million compared to 2018. This decline in OM&A is largely due to lower costs in our Canadian Coal and Corporate segments and ongoing streamlining of our workforce. Lower salary, contractor and materials expenses were partially offset by higher legal fees.
FCF increased by $12 million in 2019 compared to 2018, primarily as a result of stronger year-over-year cash flow from operating activities and lower sustaining and productivity capital expenditures after adjusting for the PPA Termination Payments.
Our performance for the year was very strong from a financial, operational and strategic perspective,- said Dawn Farrell, President and Chief Executive Officer. We successfully navigated key milestones throughout the year and entered into a transformational transaction that benefited all shareholders as we were able to accelerate our strategy and return capital to shareholders. All of the hard work by the TransAlta employees throughout the year has allowed us to progress on our main goal which is to be 100 per cent clean electricity by 2025.
2020 Objectives
In addition to meeting the financial targets defined in the outlook, everything we do in 2020 will move us closer to 100 per cent clean power by 2025. Our teams are focused on the following:
Delivering a full year of cash flow from Big Level and Antrim, which reached commercial operation in December 2019;
Significantly progressing the construction of the SemCAMS cogeneration project and Windrise wind facilities for commercial operation in 2021;
Completing the Sundance Unit 6 gas conversion in 2020;
Advancing the Sundance Unit 5 repowering project for commercial operation in 2023;
Preparing Keephills Units 2 and 3 for gas conversions in 2021;
Repaying the $400 million bond maturing in November 2020;
Continuing the share buyback program in an additional amount up to $80 million in 2020;
Achieving commercial operation for the WindCharger 10 MW battery project in 2020; and
Progressing on our Environment, Social and Governance (ESG) targets which are outlined below.
ESG Targets
A continued focus on safe operations and environmentally sustainable practices, including by minimizing environmental incidents and undertaking significant reclamation work;
By 2030, achieving a 95% reduction of SO2 emissions and a 50% reduction of NOx emissions over 2005 levels from TransAlta’s coal facilities, and a Company-wide reduction of greenhouse gases emissions of 60% below 2015 levels;
Undertaking initiatives that will enhance the environmental performance of the Company, including converting coal facilities to gas and developing new renewable projects that support customer sustainability goals to achieve both long-term power price affordability and carbon reductions;
Supporting equal access to all levels of education for youth and Indigenous peoples through financial assistance and employment opportunities;
Enhancing our commitment to workplace diversity and adopting a target of 50 per cent female membership on the Board by 2030 and achieving gender diversity of at least 40 per cent of female employment for all employees by 2030; and
Maintaining our commitment to leading ESG disclosure.
Fourth Quarter Highlights
Entered into an agreement with Kineticor Holdings Limited #2 to indirectly acquire two 230 MW Siemens F class gas turbines and related equipment for $84 million, which will be redeployed to our Sundance site as part of the strategy to repower Sundance Unit 5 to a highly efficient combined cycle unit. The Company is assuming long-term power purchase agreements for capacity plus energy, including the pass-through of GHG costs, starting in late 2023 with Shell Energy North America (Canada).
TransAlta and SemCAMS announced that they entered into definitive agreements to develop, construct and operate a cogeneration facility at the Kaybob South No. 3 sour gas processing plant. The Kaybob facility is strategically located in the Western Canadian Sedimentary Basin and accepts natural gas production out of the Montney and Duvernay formations. TransAlta will construct the cogeneration plant which is expected to be jointly owned, operated and maintained with SemCAMS. The capital cost of the new cogeneration facility is expected to be approximately $105 million to $115 million and the project is expected to deliver approximately $18 million in annual EBITDA.
Important Subsequent Events
On January 16, 2020, we announced our financial outlook and ESG targets for 2020, highlighted by the addition of recently commissioned projects and productivity improvements, which are expected to drive strong comparable EBITDA and FCF performance in 2020. The Company also announced that the Board of Directors determined that following the retirement of Ambassador Gordon D. Giffin at the upcoming annual shareholder meeting, John P. Dielwart will be appointed Chair of the Board, pending his re-election to the Board. Lastly, TransAlta declared an increase in the annualized dividend to $0.17 per common share, representing a 6.25 per cent increase.
Fourth Quarter and Full Year Segmented Review Comparable EBITDA (in CAD$ millions)
3 Months Ended
Year Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Canadian Coal
55
48
263
232
U.S. Coal
29
24
73
91
Canadian Gas
29
74
120
259
Australian Gas
28
32
118
124
Wind and Solar
80
82
231
233
Hydro
18
17
110
109
Energy Marketing
26
16
89
43
Corporate
(22)
(28)
(76)
(87)
Total Comparable EBITDA(2)
243
265
928
1,004
Canadian Coal: Excluding the PPA Termination Payments, comparable EBITDA for the year ended Dec. 31, 2019, increased $31 million compared to 2018. This largely reflects lower fuel, carbon compliance, and purchased power costs, as well as lower OM&A costs.
S. Coal: Comparable EBITDA decreased by $18 million compared to 2018, primarily due to an isolated and extreme pricing event in March. Centralia was unable to commit one of its units to physical production for day-ahead supply due to an unplanned forced outage repair.
Canadian Gas: Comparable EBITDA for 2019 decreased by $139 million compared to 2018, mainly due to the Mississauga contract ending Dec. 31, 2018 and lower scheduled payments from the Poplar Creek finance lease. Comparable EBITDA for the year ended December 31, 2019, includes nil (2018 $105 million) and $20 million (2018 $57 million) from the Mississauga and Poplar Creek contracts, respectively. Additionally, comparable EBITDA benefited from lower OM&A compared to the prior year as a result of reduced overhead and operating costs.
Australian Gas: Comparable EBITDA for the year ended Dec. 31, 2019, decreased by $6 million compared to 2018, due to the weakening of the Australian dollar and ongoing legal costs associated with our disputes with FMG .
Wind and Solar: Comparable EBITDA for 2019 was consistent with 2018. Higher insurance proceeds from tower fires at Wyoming Wind and Summerview were partially offset by a reduction in revenues due to the scheduled expiration of production-based incentives for three wind facilities.
Hydro: Comparable EBITDA for 2019 increased by $1 million compared to 2018, as we were able to reduce OM&A due to cost- saving initiatives, while absorbing the $1.5 million Brookfield Hydro Fee.
Energy Marketing: Comparable EBITDA for 2019 increased by $46 million compared to 2018 results, due to strong results from all Marketing segments, with particularly strong performance from US Western and Eastern markets due to continued high levels of volatility. OM&A increased due to higher incentives related to stronger performance. The Energy Marketing team was able to capitalize on short-term arbitrage opportunities in the markets in which we trade without materially changing the risk profile of the business unit.
Corporate: Our Corporate overhead costs in 2019 were $76 million, a decrease of $11 million compared to $87 million in 2018, primarily due to cost-efficiency initiatives and payments on lease obligations. In addition, we realized a net gain of $13 million from the total return swap on our share-based payment plans, which was mostly offset by higher legal fees. A portion of the settlement cost of our share-based payment plans is fixed by entering into total return swaps, which are cash settled every quarter. Corporate cash flow also benefited from lower sustaining and productivity capital spend due to higher spend in 2018 on automation and new information technology solutions implemented in prior years, which helped contribute to the cost efficiencies realized in 2019.
Consolidated Financial Highlights
Net earnings attributable to common shareholders for the year ended December 31, 2019, were $52 million, compared to a loss of $248 million in the prior year. Increased earnings were partially driven by the Keephills 3 and Genesee 3 swap with Capital Power Corporation that closed in the fourth quarter of 2019, where we recognized a gain on termination of the coal rights contract of $88 million and a gain on the sale of Genesee 3 of $77 million, in addition to the $56 million PPA Termination Payments received during the third quarter of 2019. Excluding the PPA Termination Payments and impairment charges in both years, as well as the gains related to Keephills 3 and Genesee 3 in 2019, we have a net loss of $20 million in 2019 compared to a net loss of $174 million in 2018. Stronger earnings are attributable to stronger performance at Canadian Coal and Energy Marketing, strong Alberta pricing, the Alberta tax rate reduction, lower OM&A costs and lower interest expense, partially offset by other losses on sale of property, plant and equipment.
Total sustaining capital expenditures of $141 million were $9 million lower compared to 2018 primarily due to lower planned major maintenance in our coal segments. Total capital expenditures of $150 million, which includes productivity capital expenditures, was in line with our expectations for the year.
Fourth Quarter and Year Ended 2019 Highlights
In $CAD millions, unless otherwise stated
3 Months Ended
Year Ended
Dec. 31, 2019
Dec. 31, 2018
Dec. 31, 2019
Dec. 31, 2018
Adjusted availability (%)(4,5)
91.6%
91.5%
90.0%
91.3%
Production (GWh) (5)
8,153
8,276
29,071
28,409
Revenues
609
622
2,347
2,249
Fuel, carbon compliance and purchased power
286
336
1,086
1,100
Operations, maintenance and administration
127
139
475
515
Net earnings (loss) attributable to common shareholders
66
(122)
52
(248)
Cash flow from operating activities
181
132
849
820
Comparable EBITDA(1,2,3)
243
265
984
1,161
FFO(1,3)
189
217
757
927
FCF(1,3)
121
98
435
524
Net earnings (loss) per share attributable to common shareholders, basic and diluted
$0.24
$(0.43)
$0.18
$(0.86)
FFO per share(1,3)
$0.67
$0.76
$2.67
$3.23
FCF per share(1,3)
$0.43
$0.34
$1.54
$1.83
Dividends declared per common share
$0.04
$0.08
$0.12
$0.20
Dividends declared per preferred share(6)
$0.26
$0.52
$0.78
$1.29
TransAlta is in the process of filing its Annual Information Form, Audited Consolidated Financial Statements and accompanying notes, as well as the associated Management’s Discussion & Analysis (MD&A). These documents will be available today on the Investors section of TransAlta’s website at transalta.com or through SEDAR at www.sedar.com.
TransAlta will also be filing its Form 40-F with the U.S. Securities and Exchange Commission. The form will be available through their website at www.sec.gov. Paper copies of all documents are available to shareholders free of charge upon request.
Notes
(1) These items are not defined under IFRS. Presenting these items from period to period provides management and investors with the ability to evaluate earnings trends more readily in comparison with prior periods results. Refer to the Comparable EBITDA, Funds from Operations and Free Cash Flow and Earnings and Other Measures on a Comparable Basis sections of the Company’s MD&A for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS.
(2) During the first quarter of 2019, we revised our approach to reporting adjustments to arrive at Comparable EBITDA, mainly to be more comparable with other companies in the industry. Comparable EBITDA is now adjusted to exclude the impact of unrealized mark-to-market gains or losses. The current and prior period amounts have been adjusted to reflect this change.
(3) Includes the PPA Termination Payment of $157 million received from the Balancing Pool for the early termination of Sundance B and C PPAs in the first quarter of 2018 and $56 million received following the successful outcome of the dispute with the Balancing Pool in the third quarter of 2019.
(4) Availability and production includes all generating assets under generation operations that we operate and finance leases and excludes hydro assets and equity investments. Production includes all generating assets, irrespective of investment vehicle and fuel type.
(5) Adjusted for economic dispatching at U.S. Coal.
(6) Weighted average of the Series A, B, C, E, and G preferred share dividends declared. Dividends declared vary year over year due to timing of dividend declarations.
Conference call
TransAlta will hold a conference call and webcast at 8:00 a.m. MST (10:00 a.m. EST) today, March 4, 2020, to discuss our fourth quarter and full year 2019 results. The call will begin with a short address by Dawn Farrell, President and CEO, and Todd Stack, Chief Financial Officer, followed by a question and answer period for investment analysts and investors. A question and answer period for the media will immediately follow.
Dial-in numbers Fourth Quarter and Full Year 2019 Results:
Toll-free North American participants call: 1-888-231-8191
A link to the live webcast will be available on the Investor Centre section of TransAlta’s website at https://transalta.com/investors/events-and-presentations. If you are unable to participate in the call, the instant replay is accessible at 1-855-859-2056 (Canada and USA toll free) with TransAlta pass code 6481289 followed by the # sign. A transcript of the broadcast will be posted on TransAlta’s website once it becomes available.
About TransAlta Corporation:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and has been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. TransAlta is proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit our web site at transalta.com.
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, without limitation, statements pertaining to: our 2020 outlook, including EBITDA, FCF and sustaining capital; our 2020 objectives, including significantly progressing the construction of the Kaybob cogeneration project and Windrise wind facilities to achieve commercial operation in 2021, completing the Sundance Unit 6 gas conversion in 2020, advancing the Sundance Unit 5 repowering project and achieving commercial operation in 2023, converting Keephills Units 2 and 3 to gas in 2021, repaying the $400 million bond maturity, continuing the share buyback program in an additional amount of up to $80 million, achieving commercial operation for the WindCharger battery project; achieving a 95% reduction of SO2 emissions and a 50% reduction of NOx emissions over 2005 levels from TransAlta’s coal facilities, and a Company-wide reduction of greenhouse gases emissions of 60% below 2015 levels; enhancing the environmental performance of the Company; achieving 50 per cent female membership on the Board by 2030 and achieving gender diversity of at least 40 per cent of female employment for all employees by 2030; the construction and expected capital cost of the new Kaybob cogeneration facility and this project’s expected annual EBITDA; and the appointment of John P. Dielwart as Chair of the Board. The forward-looking statements contained in this news release are based on current expectations, estimates, projections and assumptions, having regard to the Corporation’s experience and its perception of historical trends, and includes, but is not limited to, expectations, estimates, projections and assumptions relating to: foreign exchange rates; global economic growth; electricity load growth; electricity prices and carbon tax; interest rates; 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 forward-looking statements are not historical facts but are based on TransAlta’s belief and assumptions based on information available at the time the assumptions were made, including, but not limited to, the current political and regulatory environment, the price of power in Alberta and the condition of the financial markets. 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: operational risks involving our facilities; changes in market prices where we operate; unplanned outages at generating facilities and the capital investments required; equipment failure and our ability to carry out repairs in a cost effective and timely manner; the effects of weather, catastrophes and public health crises; disruptions in the source of thermal fuels, water, solar or wind required to operate our facilities, including the necessary natural gas supply to support the conversion of the coal units; energy trading risks; failure to obtain necessary regulatory approvals in a timely fashion, or at all; negative impact to our credit ratings; legislative or regulatory developments and their impacts; increasingly stringent environmental requirements and their impacts; increased competition; global capital markets activity (including our ability to access financing at a reasonable cost); changes in prevailing interest rates; currency exchange rates; inflation levels and commodity prices; general economic conditions in the geographic areas where TransAlta operates; disputes or claims involving TransAlta or TransAlta Renewables, including those pertaining to the Brookfield investment and the commissioning of South Hedland; and other risks and uncertainties discussed in the Company’s materials filed with the 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, 2019. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect TransAlta’s expectations only as of the date of this news release. The purpose of the financial outlooks contained in this news release are to give the reader information about management’s current expectations and plans and readers are cautioned that such information may not be appropriate for other purposes and is given as of the date of this news release. TransAlta 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 otherwise indicated.
TransAlta Provides Update On COVID-19 Implemented Measures
TransAlta Corporation (TransAlta) (TSX: TA) (NYSE: TAC) will release its fourth quarter and full year 2019 results before markets open on Wednesday, March 4, 2020. A conference call and webcast to discuss the results will be held for investors, analysts, members of the media and other interested parties the same day beginning at 8:00 a.m. Mountain Time (10:00 a.m. ET). The media will be invited to ask questions following analysts.
Please contact the conference operator five minutes prior to the call, noting TransAlta Corporation as the company.
Dial-in numbers Fourth Quarter and Full Year 2019 Results:
Toll-free North American participants call: 1-888-231-8191
A link to the live webcast will be available on the Investor Centre section of TransAlta’s website at https://transalta.com/investors/events-and-presentations. If you are unable to participate in the call, the instant replay is accessible at 1-855-859-2056 (Canada and USA toll free) with TransAlta pass code 6481289 followed by the # sign. A transcript of the broadcast will be posted on TransAlta’s website once it becomes available.
About TransAlta Corporation:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and has been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. TransAlta is proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit its web site at transalta.com.
TransAlta Provides Update On COVID-19 Implemented Measures
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) announced today its financial outlook and environmental, social and governance (ESG) targets for 2020, highlighted by the addition of recently commissioned projects and productivity improvements, which are expected to drive strong comparable EBITDA and free cash flow (FCF) performance in 2020. The Company also announced that the Board of Directors (the Board) determined that following the retirement of Ambassador Gordon D. Giffin at the upcoming annual shareholder meeting, John P. Dielwart will be appointed Chair of the Board, pending his re-election to the Board. Lastly, TransAlta declared an increase in the annualized dividend to $0.17 per common share, representing a 6.25 per cent increase.
2020 Outlook
Objectives for 2020 include:
Achieving free cash flow in the range of $325 million to $375 million;
Delivering a full year of cash flow from Big Level and Antrim, which reached commercial operation in December;
Significantly progressing the construction of the SemCAMS cogeneration project and Windrise wind facilities for commercial operation in 2021;
Completing the Sundance Unit 6 gas conversion in 2020;
Advancing the Sundance Unit 5 re-powering project for commercial operation in 2023;
Preparing Keephills Units 2 and 3 for gas conversions in 2021;
Repaying the $400 million bond maturing in November 2020;
Continuing the share buyback program in an amount up to $80 million in 2020;
Achieving commercial operation for the Windcharger battery project in 2020; and
Progressing on our ESG targets.
Confidence in our strategy and our transformation has allowed the Board to begin the process of restoring a growing dividend at TransAlta, commented Ambassador Giffin, Chair of the Board.
ESG Targets
TransAlta has a long history of adopting leading sustainability practices, including 25 years of ESG reporting and voluntarily integrating its sustainability report into its annual report since 2015. TransAlta established its first ESG goals in 2014 and is proud to announce its 2020 and longer-term ESG goals, which are aligned with the UN Sustainable Development Goals.
We are in the midst of a transformation that will see TransAlta become a leading Canadian clean electricity company. We have already reduced our greenhouse gas emissions by approximately 36 per cent over 2015, we direct less than one per cent of our waste to landfills, and we have industry leading representation of women in leadership positions and on our Board, commented Dawn Farrell, President and Chief Executive Officer of the Company. The key components of the Company’s approved 2020 ESG targets include:
A continued focus on safe operations and environmentally sustainable practices, including by minimizing environmental incidents and undertaking significant reclamation work;
By 2030, achieving a 95% reduction of SO2 emissions and a 50% reduction of NOx emissions over 2005 levels from TransAlta’s coal facilities, and a Company-wide reduction of greenhouse gases emissions of 60% below 2015 levels;
Undertaking initiatives that will enhance the environmental performance of the Company, including converting coal facilities to gas and developing new renewable projects that support customer sustainability goals to achieve both long-term power price affordability and carbon reductions;
Supporting equal access to all levels of education for youth and Indigenous peoples through financial assistance and employment opportunities;
Enhancing our commitment to workplace diversity and adopting a target of 50 per cent female membership on the Board by 2030 and achieving gender diversity of at least 40 per cent of female employment for all employees by 2030; and
Maintaining our commitment to leading ESG disclosure.
The full details of the approved ESG targets are now available at transalta.com/sustainability. More information in regard to these ESG targets and the Company’s ESG performance will be included in the Company’s integrated annual report for the year-ended December 31, 2019.
Chair of the Board
TransAlta announced today that the Board has determined to appoint John P. Dielwart as Chair of the Board, upon his re-election as an independent director at TransAlta’s next annual shareholder meeting and immediately following Ambassador Giffin’s retirement from the Board. As previously announced, Ambassador Giffin is retiring from the Board in 2020 after serving as Chair since 2011.
John has a distinguished reputation as a strategic business leader who has demonstrated an ability to enhance shareholder value in public companies, which makes him the ideal Chair,- said Ambassador Giffin. The Board conducted a thorough and deliberative succession process leading us to unanimously endorse John as our next Chair. It has been a privilege serving alongside such a dedicated Board and executive team. I wish everyone at TransAlta all the best and look forward to watching the Company continue to evolve its unique culture and execute on strategic initiatives that will deliver strong shareholder returns for years to come.
Dawn Farrell commented, It has been my pleasure to have worked closely with Gordon over the past number of years. His insight, judgment and dedication to the development of our strategy will be greatly missed by management. On behalf of all of TransAlta, I would like to thank him for his leadership and dedication.
Mr. Dielwart has served as independent director on the Board since 2014, and currently serves as the Chair of the Governance, Safety and Sustainability Committee. He is also on the Investment Performance Committee of the Board and has previously served on the Audit, Finance and Risk Committee. Mr. Dielwart is a founder and Director of ARC Resources Ltd. from 1996 to present and served as Chief Executive Officer of ARC Resources Ltd. from 2001 to 2013. Mr. Dielwart earned a Bachelor of Science (Distinction) in Civil Engineering from the University of Calgary, is a member of the Association of Professional Engineers and Geoscientists of Alberta (APEGA) and a Past-Chairman of the Board of Governors of the Canadian Association of Petroleum Producers (CAPP). Mr. Dielwart is also a director and former Co-Chair of the Calgary and Area Child Advocacy Centre. In 2015, Mr. Dielwart was inducted into the Calgary Business Hall of Fame.
I am honoured to have the confidence of the Board as we continue our transformation into a leading clean electricity company, said Mr. Dielwart. I offer Gordon thanks for expertly guiding us through a period of unprecedented regulatory change and doing so in a manner that established a clear path towards growth and clean electricity. I am also confident in our executive team’s ability to execute on our strategy in order to realize continued success.
Financial Outlook and Assumptions
The following table provides additional details pertaining to our 2020 outlook:
Measure
Target
Comparable EBITDA(1)
$925 million to $1,000 million
FCF (1)
$325 million to $375 million
Range of key power price assumptions:
Market
Power Prices ($/MWh)
Alberta Spot
$53 to $63
Mid-C Spot (US$)
$25 to $35
Other assumptions relevant to 2020 financial outlook:
Sustaining Capital(2)
$170 million to $200 million
These items are not defined under IFRS. Presenting these items provides management and investors with the ability to evaluate earnings trends more readily in comparison with prior periods results. Refer to the Free Cash Flow, Discussion of Segmented Comparable Results, and Earnings and Other Measures on a Comparable Basis sections of TransAlta’s 2019 third quarter management discussion and analysis for additional information.
Excludes payments associated with finance leases.
Dividend Declaration
The Board today declared a quarterly dividend of $0.0425 per common share payable on April 1, 2020 to shareholders of record at the close of business on March 2, 2020, which represents a 6.25 per cent increase in our dividend level.
We are committed to returning capital to shareholders, including through our normal course issuer bid and our dividend. The dividend increase demonstrates our confidence in our strategy and our commitment to the recently announced dividend policy of returning between 10% to 15% of deconsolidated funds from operations to shareholder, remarked Dawn Farrell.
The Board also declared the following quarterly dividend on its Cumulative Redeemable Rate Reset First Preferred Shares for the period starting from and including December 31, 2019 up to but excluding March 31, 2020:
Preferred Shares
TSX Stock Symbol
Dividend Rate
Dividend Per Share
Record Date
Payment Date
Series A
TA.PR.D
2.709%
$0.16931
March 2, 2020
March 31, 2020
Series B*
TA.PR.E
3.682%
$0.22949
March 2, 2020
March 31, 2020
Series C
TA.PR.F
4.027%
$0.25169
March 2, 2020
March 31, 2020
Series E
TA.PR.H
5.194%
$0.32463
March 2, 2020
March 31, 2020
Series G
TA.PR.J
4.988%
$0.31175
March 2, 2020
March 31, 2020
*Please note the quarterly floating rate on the Series B Preferred Shares will be reset every quarter.
About TransAlta:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydroelectric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and has been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. TransAlta is proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit its web site at transalta.com.
Forward Looking Statements and Non-GAAP measures:
This news release contains forward looking statements within the meaning of applicable securities laws.The use of any of the words expect, anticipate, continue, may, will, should, plans, intends and similar expressions are intended to identify forward looking information or statements. More particularly, and without limitation, this news release contains forward looking statements and information relating to:delivering a full year of cash flow from Big Level and Antrim; declaring commercial operation for the Windcharger battery project in 2020; significantly progressing the construction of the SemCAMS cogeneration project and Windrise wind facilities for commercial operation in 2021; completing Sundance Unit 6 gas conversion in 2020; achieving the Sundance Unit 5 re-powering project in 2023; the Keephills Unit 2 and 3 gas conversion being completed in 2021; repaying the $400 million bond maturing in November 2020; continuing share buyback program in an amount up to $80 million; progressing on our ESG Targets to achieve top performance in safety; expected 2020 financial results, including free cash flow (FCF), Comparable EBITDA, sustaining capital and productivity capital; the appointment of Mr. Dielwart as Chair of the Board; and amount of any future dividends that may be declared by the Board.These forward looking statements are based on a number of assumptions considered by the Company to be reasonable as of the date of this news release, including, but not limited to, the following: the Alberta spot power pricing of $53/MWh to $63/MWh and Mid-C spot pricing of US$25/MWh to US$35/MWh; no significant changes to applicable laws and regulations in the markets in which the Company operates, and assumptions regarding expected financial results from projects; and other assumptions noted in the 2020 financial outlook. The forward looking statements are subject to a number of risks and uncertainties that may cause actual performance, events or results to differ materially from those contemplated by the forward looking statements, which include: operational risks involving our facilities; debt obligations, working capital requirements or future capital requirements being greater than anticipated; environmental requirements and changes in, or liabilities under, these requirements; changes in market prices where we operate; our ability to carry out planned outages and repairs in a cost effective and timely manner; energy trading risks; legislative or regulatory developments and their impacts; general economic conditions in the geographic areas where TransAlta operates and other risk factors contained in the Company’s Management Proxy Circular dated March 26, 2019 and its Annual Information Form and Management’s Discussion and Analysis for the year ended December 31, 2018, filed under the Company’s profile with the Canadian securities regulators on www.sedar.com and the U.S. Securities and Exchange Commission on www.sec.gov. The purpose of the financial outlooks contained in this news release are to give the reader information about management’s current expectations and plans and readers are cautioned that such information may not be appropriate for other purposes and is given as of the date of this news release. The Company undertakes no obligation to update or revise any forward looking information except as required by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from those in the forward looking information, refer to the Company’s Annual Report and Management’s Discussion and Analysis filed under the Company’s profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission at www.sec.gov.
The Company evaluates its performance and the performance of its business segments using a variety of measures. Certain of the financial measures discussed in this press release, include Comparable EBITDA and FCF, which are not defined under International Financial Reporting Standards (IFRS) and, therefore, should not be considered in isolation or as an alternative to IFRS measures when assessing the financial performance or liquidity of the Company. These non-IFRS measures have no standardized meaning under IFRS, may not be comparable to similar measures presented by other issuers and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Non-IFRS measures are presented to provide management and investors with a proxy for the amount of cash generated from operating and trading activities. Please refer to the Company’s MD&A, which is available on the Company’s website or under the Company’s profile on www.sedar.com for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS.
TransAlta Provides Update On COVID-19 Implemented Measures
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) announced today that it has increased Free Cash Flow (FCF) guidance to $350 million to $380 million from the prior range of $300 million to $340 million. This expected increase to FCF is primarily attributable to the continued strong performance of the Energy Marketing segment into the fourth quarter. The gross margin for our Energy Marketing segment is now forecasted to be at the top end of the range of $100 million to $120 million that had been disclosed by the Company in its third quarter Management’s Discussion & Analysis, and is significantly above the trailing 3-year comparable gross margin average of approximately $71 million. This revision to FCF guidance is also supported by continued solid operational and financial performance of the generation business segments. The Company continues to track within the $875 million to $975 million guidance range of Comparable EBITDA for the year-ended December 31, 2019.
The factors and assumptions which contribute to TransAlta’s assessment of the free cash flow and Comparable EBITDA ranges are consistent with existing Company disclosures, and such guidance ranges are subject to the risks and uncertainties inherent in the Company’s business. Readers are directed to the Forward Looking Statements and Non-GAAP Measures disclaimer below and the Risk Factors section in the Management’s Discussion & Analysis and the Annual Information Form for the year ended December 31, 2018 for a description of such factors, assumptions, risks and uncertainties.
About TransAlta:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydroelectric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and has been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. TransAlta is proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit its web site at transalta.com.
Forward Looking Statements and Non-GAAP measures:
This news release contains forward looking statements within the meaning of applicable securities laws.The use of any of the words expect, anticipate, continue, estimate, may, will, project, should, propose, plans, intends and similar expressions are intended to identify forward looking information or statements. More particularly, and without limitation, this news release contains forward looking statements and information relating to expected year-end free cash flow, Comparable EBITDA, gross margin expected from the Energy Marketing segment and the annual expected run-rate of Energy Marketing. These forward looking statements are based on a number of assumptions considered by the Company to be reasonable as of the date of this news release, including, but not limited to, the following: the Alberta and Mid-C spot pricing and operational performance and availability remaining consistent through the remainder of 2019. The forward looking statements are subject to a number of risks and uncertainties that may cause actual performance, events or results to differ materially from those contemplated by the forward looking statements, which include: unplanned outages; lower than expected energy spot pricing in Alberta and Mid-C; economic and competitive conditions, including unusual levels of trading volatility; changes in law, exchange rates or interest rates; and other risk factors contained in the Company’s Management Proxy Circular dated March 26, 2019 and its Annual Information Form and Management’s Discussion and Analysis for the year ended December 31, 2018, filed under the Company’s profile with the Canadian securities regulators on www.sedar.com and the U.S. Securities and Exchange Commission on www.sec.gov. The purpose of the financial outlooks contained in this news release are to give the reader information about management’s current expectations and plans and readers are cautioned that such information may not be appropriate for other purposes and is given as of the date of this news release. The Company undertakes no obligation to update or revise any forward looking information except as required by law. For additional information on the assumptions made, and the risks and uncertainties which could cause actual results to differ from those in the forward looking information, refer to the Company’s Annual Report and Management’s Discussion and Analysis filed under the Company’s profile on SEDAR at www.sedar.com and with the U.S. Securities and Exchange Commission at www.sec.gov.
The Company evaluates its performance and the performance of its business segments using a variety of measures. Certain of the financial measures discussed in this press release, include gross margin, Comparable EBITDA and free cash flow, which are not defined under International Financial Reporting Standards (IFRS) and, therefore, should not be considered in isolation or as an alternative to IFRS measures when assessing the financial performance or liquidity of the Company. These non-IFRS measures have no standardized meaning under IFRS, may not be comparable to similar measures presented by other issuers and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Non-IFRS measures are presented to provide management and investors with a proxy for the amount of cash generated from operating and trading activities. Please refer to the Company’s MD&A, which is available on the Company’s website or under the Company’s profile on www.sedar.com for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS.
TransAlta Provides Update On COVID-19 Implemented Measures
Financial and Operating Highlights
$305 million of comparable EBITDA for the quarter. Excluding PPA Settlements (one-time additional amount of $56 million), comparable EBITDA was $249 million and in line with 2018;
$741 million of comparable EBITDA for the nine months ended Sept. 30, 2019. Excluding PPA Settlements, comparable EBITDA was $685 million, 7% lower than 2018;
$170 million of free cash flow (FCF) for the quarter. FCF from ongoing operations was $114 million, a 21% increase to 2018 FCF;
$314 million of FCF for the nine months ended Sept. 30, 2019. Excluding the PPA Settlements, FCF was $258 million, 4% lower than 2018;
$114 million of operations, maintenance, and administration (OM&A) expense for the quarter, a $6 million decrease, or 5% compared to the same period in 2018;
$348 million of OM&A expense for the nine months ended Sept. 30, 2019, a $28 million decrease, or 7% compared to the same period in 2018;
Purchased and cancelled 735,000 common shares under the normal course issuer bid (NCIB) at an average price of $8.58 per common share, for a total cost of $6 million. For the nine months ended Sept. 30, 2019, we purchased and cancelled 3,133,200 common shares for a total cost of $27 million; and
Increased full year 2019 FCF outlook range to $300 $340 million, from the previous range of $270 $330 million.
Strategic Highlights
Successful in our arbitration with the Balancing Pool, receiving an additional $56 million in PPA Settlements for the Sundance units which was the full amount we were entitled to under the termination clauses in the PPA;
Announced our Clean Energy Investment Plan, which includes converting our existing Alberta coal assets to natural gas and advancing our leadership position in on-site generation and renewable energy. We are currently pursuing opportunities of up to approximately $1.9 billion as part of this plan, including approximately $800 million of renewable energy projects already under construction;
Issued Limited Notice to Proceed for the Keephills Unit 2 boiler conversion;
Received Alberta Utilities Commission approval for the Windrise project ahead of schedule;
Entered into an agreement with SemCAMS Midstream ULC to construct and operate a new cogeneration facility at the Kaybob South No. 3 sour gas processing plant with a capital cost of $105 to $115 million. SemCAMS will purchase 50 per cent of the plant at commissioning, subject to the satisfaction of certain conditions;
Closed the previously announced agreement with Capital Power Corporation to swap TranAlta’s 50 per cent ownership interest in the Genesee 3 facility for Capital Power’s 50 per cent ownership interest in the Keephills 3 facility; and
Acquired two 230 MW Siemens F class gas turbines and related equipment for $84 million to be redeployed to our Sundance site as part of the strategy to repower Sundance Unit 5 to a highly efficient combined cycle unit.
CALGARY, Alberta (November 7, 2019)
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) today reported its third quarter 2019 financial results, which reflect solid operational and financial performance for the quarter. As a result of strong operational performance year-to-date and our expectations for the balance of the year, we have increased our full year 2019 FCF outlook.
Comparable EBITDA for the three and nine months ended Sept. 30, 2019, excluding the PPA Settlements, decreased $1 million and $49 million, respectively, compared to the same periods in 2018. Strong performance at the Canadian Coal and Energy Marketing segments significantly offset reductions in EBITDA at Canadian Gas that were expected as the long-term Mississauga PPA rolled off at the end of 2018 and the Poplar Creek PPA stepped down. At Canadian Coal, comparable EBITDA improved in the nine months ended Sept. 30, 2019 compared to the same period in 2018, due to the combined impact of higher realized prices on greater merchant production, increased co-firing resulting in lower fuel, carbon compliance and purchased power costs as well as lower OM&A costs. In addition, performance from our Energy Marketing segment was stronger than the same periods in 2018, particularly from US Western and Eastern markets due to continued high levels of volatility across North America power markets. Comparable EBITDA for the nine months ended Sept. 30, 2019 was negatively impacted by the unplanned outage at US Coal during the first quarter of 2019.
FCF, after adjusting for the PPA Settlements, was $20 million higher for the three months ended Sept. 30, 2019 compared to the same period in 2018, mainly due to timing of sustaining capital expenditures and strong results, despite significant cash flow declines from the Mississauga and Poplar Creek PPAs. For the nine months ended Sept. 30, 2019, FCF was $11 million lower, excluding the PPA Settlements, compared with the same period in 2018, mainly due to lower comparable EBITDA, partially offset by lower distributions paid to subsidiaries non-controlling interests.
Results for the quarter were stronger than expected and demonstrated progress in our business transition,- said Dawn Farrell, President and Chief Executive Officer. We continue to be pleased with the Alberta thermal business which showed stronger margins and availability performance. With the Pioneer Pipeline contract now in place, we see further improvements in that business segment. Our Clean Energy Investment Plan is tracking with two wind farms to come on-line at the end of 2019 and the acceleration of our gas repowering strategy due to the purchase of the Kineticor assets, commented Mrs. Farrell.
Canadian Coal: Excluding the PPA Settlements, comparable EBITDA for the three and nine months ended Sept. 30, 2019 was $6 million and $24 million higher, respectively, compared with the same periods in 2018. This largely reflects the combined impact of higher prices in the first half of the year, and lower fuel, carbon compliance, purchased power and OM&A costs.
U.S. Coal: Comparable EBITDA for the three months ended Sept. 30, 2019, increased by $18 million compared to the same period in 2018, due to strong availability of units. Comparable EBITDA for the nine months ended Sept. 30, 2019, was down $23 million compared to the same period in 2018. During an isolated and extreme pricing event in March, Centralia was unable to commit one of its units to physical production for day ahead supply due to an unplanned forced outage repair. As a result, the Corporation incurred cash losses of $25 million on its day ahead hedging position.
Canadian Gas: Comparable EBITDA for the three and nine months ended Sept. 30, 2019 decreased by $28 million and $89 million, respectively, compared to the same periods in 2018, mainly due to the Mississauga contract ending Dec. 31, 2018 and lower scheduled payments from the Poplar Creek finance lease. Additionally, year-to-date results have benefited from lower OM&A costs compared to the prior year, and lower fuel costs at Sarnia due to less steam demand stemming from customer planned outages. In the three and nine months ended Sept. 30, 2018, comparable EBITDA included $31 million and $103 million of EBITDA, respectively, from the Mississauga and Poplar Creek contracts.
Australian Gas: Comparable EBITDA for the three and nine months ended Sept. 30, 2019 was consistent with the same periods in 2018, which was expected due to the nature of our contracts.
Wind and Solar: Comparable EBITDA for the three and nine months ended Sept. 30, 2019 was consistent with the same periods in 2018. In the third quarter, higher overall production, higher sales of green attributes and lower OM&A costs were offset by lower insurance proceeds. For the nine months ended Sept. 30, 2019, higher sales of green attributes and lower OM&A costs were offset by lower production.
Hydro: Total gross revenues decreased by $6 million for the three months ended Sept. 30, 2019 compared to the same period in 2018, due to unfavourable power and ancillary services pricing. Total gross revenues increased by $6 million for the nine months ended Sept. 30, 2019 as favourable energy sales more than offset lower ancillary services revenue. After net payments relating to the Alberta hydro PPA, comparable EBITDA for the three and nine months ended Sept. 30, 2019 was consistent with the same periods in 2018.
Energy Marketing: For the three months ended Sept. 30, 2019, comparable EBITDA was consistent with the same period in 2018, due to strong results in both periods. For the nine months ended Sept. 30, 2019, comparable EBITDA was $36 million higher compared to the same period in 2018 due to strong results across all markets with particularly strong performance from US Western and Eastern markets due to continued high levels of volatility across North American power markets. OM&A increased due to higher incentive costs related to stronger performance. The Energy Marketing team was able to capitalize on short term arbitrage opportunities in the markets we trade.
Corporate: During the three months ended Sept. 30, 2019, OM&A costs decreased by $2 million, due to cost saving efficiencies, partially offset by higher legal fees. For the nine months ended Sept. 30, 2019, OM&A costs decreased by $8 million, primarily due to the year-to-date realized net gain of $8 million from the total return swap on our share-based payment plans, payments on leases that were capitalized on implementation of IFRS 16 and other cost saving efficiencies, partially offset by higher legal fees. The losses on the total return swap realized during the second and third quarters of 2019 partially offset the gain realized in the first quarter of 2019. A portion of the settlement cost of our share-based payment plans is fixed by entering into total return swaps, which are cash settled every quarter.
2019 Outlook Update
During the first nine months of the year, we have experienced stronger than anticipated results from our Canadian Coal segment. This is due to the combined impact of higher realized prices, lower fuel, carbon compliance and purchased power costs as the Pioneer Pipeline transported first gas four months ahead of schedule, as well as lower OM&A costs. Year-to-date results combined with our forecast provide us with the confidence to revise our FCF outlook.
Consolidated Earnings Review
Net earnings attributable to common shareholders for the three and nine months ended Sept. 30, 2019 were $51 million and a loss of $14 million, respectively. Increased earnings was largely due to the $56 million PPA Settlement received during the third quarter of 2019 as well as the reversal of a previous impairment at the Centralia plant of $151 million, which was partially offset by the $109 million increase for the decommissioning and restoration liability at the Centralia mine and the $18 million write-off of project development costs. Excluding the PPA Settlements and impairment charges and reversals in 2019 and 2018, net loss for the three and nine months ended Sept. 30, 2019 was $18 million and $83 million, respectively, which are improvements over 2018. Stronger earnings are attributable to stronger performance at Canadian Coal and Energy Marketing, strong year-to-date Alberta pricing, the Alberta tax rate reduction, lower OM&A costs, and lower interest expense, partially offset by other gains and losses.
For the nine months ended Sept. 30, 2019, total sustaining capital expenditures of $111 million were $13 million higher compared to 2018 primarily due to higher planned major maintenance in the Canadian Coal segment. There were no planned maintenance outages on operated power plants in Canadian Coal for 2018. Total capital expenditures of $118 million, which includes productivity capital expenditures, were $8 million higher than 2018 and in-line with the Company’s guidance for the year.
Significant planned major outages at TransAlta’s operated units for the remainder of 2019 include the following:
Distributed planned maintenance expenditures across the entire Hydro fleet; and
Distributed expenditures across our Wind fleet, focusing on planned component replacements.
Third Quarter and Nine Months Ended Sept. 30, 2019 and 2018 Financial and Operational Highlights
TransAlta is in the process of filing its Consolidated Financial Statements and accompanying notes, as well as the associated Management’s Discussion & Analysis (MD&A). These documents will be available November 7, 2019 on the Investors section of TransAlta’s website at transalta.com or through SEDAR at www.sedar.com and EDGAR at www.sec.gov/edgar.shtml.
Conference call
TransAlta will hold a conference call and webcast at 9:00 a.m. MST (11:00 a.m. EST) today, November 7, 2019, to discuss our third quarter 2019 results. The call will begin with a short address by Dawn Farrell, President and CEO, and Todd Stack, Chief Financial Officer,followed by a question and answer period for investment analysts and investors. 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 Chiara Valentini as moderator.
Dial-in numbers Third Quarter 2019 Results:
Toll-free North American participants call: 1-888-231-8191
Outside of Canada & USA call: 1-647-427-7450
A link to the live webcast will be available on the Investor Centre section of TransAlta’s website at https://transalta.com/investors/events-and-presentations. If you are unable to participate in the call, the instant replay is accessible at 1-855-859-2056 (Canada and USA toll free) with TransAlta pass code 5275707 followed by the # sign. A transcript of the broadcast will be posted on TransAlta’s website once it becomes available.
Notes
These items are not defined under IFRS. Presenting these items from period to period provides management and investors with the ability to evaluate earnings trends more readily in comparison with prior periods results. Refer to the Discussion of Consolidated Results section of the Company’s MD&A for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS.
During the first quarter of 2019, we revised our approach to reporting adjustments to arrive at comparable EBITDA, mainly to be more comparable with other companies in the industry. Comparable EBITDA is now adjusted to exclude the impact of unrealized mark-to-market gains or losses. Both the current and prior period amounts have been adjusted to reflect this change.
Availability and production includes all generating assets (generation operations and finance leases that we operate).
Includes $157 million received from the Balancing Pool for the early termination of Sundance B and C PPAs in the first quarter of 2018 and $56 million received on settlement of the dispute with the Balancing Pool in the third quarter of 2019.
Dividends declared vary year over year due to timing of dividend declarations.
About TransAlta Corporation:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in Canada, the United States and Australia with a focus on long-term shareholder value. TransAlta provides municipalities, medium and large industries, businesses and utility customers with clean, affordable, energy efficient and reliable power. Today, TransAlta is one of Canada’s largest producers of wind power and Alberta’s largest producer of hydro-electric power. For over 100 years, TransAlta has been a responsible operator and a proud community-member where its employees work and live. TransAlta aligns its corporate goals with the UN Sustainable Development Goals and has been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. TransAlta is proud to have achieved the Silver level PAR (Progressive Aboriginal Relations) designation by the Canadian Council for Aboriginal Business.
For more information about TransAlta, visit its web site at transalta.com.
Forward Looking Statements
This News Release includes forward-looking information, within the meaning of applicable Canadian securities laws, and forward-looking statements, within the meaning of applicable United States securities laws, including the United States Private Securities Litigation Reform Act of 1995 (collectively referred to herein as forward-looking statements). All forward-looking statements are based on our beliefs as well as assumptions based on information available at the time the assumption was made and on management’s experience and perception of historical trends, current conditions, results and expected future developments, as well as other factors deemed appropriate in the circumstances. Forward-looking statements are not facts, but only predictions and generally can be identified by the use of statements that include phrases such as may, will, can; could, would, shall, believe, expect, estimate, anticipate, intend, plan, forecast foresee, potential, enable, continue or other comparable terminology. These statements are not guarantees of our future performance, events or results and are subject to a number of significant risks, uncertainties and other important factors that could cause our actual performance, events or results to be materially different from that set out in the forward-looking statements. More particularly, and without limitation, this news release contains forward-looking statements relating to: Clean Energy Investment Plan and the investment in our Alberta thermal fleet and renewable energy projects already under construction; the construction and operation of a new cogeneration facility at the Kaybob South No. 3 sour gas processing plant with a capital cost of $105 to $115 million; SemCAMS purchase of 50 per cent of the plant at commissioning; redeploying the two 230 MW Siemens F class gas turbines and related equipment to our Sundance site as part of the strategy to repower Sundance Unit 5 to a highly efficient combined cycle unit; achieving our 2019 free cash flow outlook range of $300 $340 million; the Antrim and Big Level wind farm coming on-line at the end of 2019; statements under the heading 2019 Outlook update, including as it pertains to guidance on Comparable EBITDA and free cash flow; and significant planned major outages at TransAlta’s operated units for the remainder of 2019, including distributed planned maintenance expenditures across the entire Hydro fleet and distributed expenditures across our Wind fleet, focusing on planned component replacements.
These statements are based on TransAlta’s beliefs and assumptions based on information available at the time the assumptions were made, including assumptions pertaining to: the Company’s ability to successfully defend against any existing or potential legal actions or regulatory proceedings; no significant changes to regulatory, securities, credit or market environments; key assumptions pertaining to power prices remaining unchanged; our ownership of or relationship with TransAlta Renewables Inc. not materially changing; and the anticipated benefits and financial results generated on the coal-to-gas conversions, repowerings and the Company’s other strategies. The forward-looking statements are subject to a number of risks and uncertainties that may cause actual performance, events or results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include: the outcomes of existing or potential legal actions or regulatory proceedings not being as anticipated, including those pertaining to the Brookfield investment; fluctuations in demand, market prices and the availability of fuel supplies required to generate electricity; changes in the current or anticipated legislative, regulatory and political environments in the jurisdictions in which we operate; environmental requirements and changes in, or liabilities under, these requirements; and other risks and uncertainties contained in the Company’s Management Proxy Circular dated March 26, 2019 and its Annual Information Form and Management’s Discussion and Analysis for the year ended December 31, 2018, filed under the Company’s profile with the Canadian securities regulators on www.sedar.com and the U.S. Securities and Exchange Commission on www.sec.gov. Readers are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on these forward-looking statements, which reflect TransAlta’s expectations only as of the date of this news release. In light of these risks, uncertainties and assumptions, the forward-looking statements might occur to a different extent or at a different time than we have described, or might not occur at all. TransAlta 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 otherwise indicated.
