Media Advisory: TransAlta Fourth Quarter and Full Year 2019 Results and Conference Call
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 Announces 2020 Outlook and ESG Targets, Declares Increased Common Dividend and Appoints John P. Dielwart as the next Chair of the Board
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.
Media Advisory: TransAlta Fourth Quarter and Full Year 2019 Results and Conference Call
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.
Media Advisory: TransAlta Fourth Quarter and Full Year 2019 Results and Conference Call
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.
TransAlta Advances its Clean Energy Investment Plan
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) announced today that it has entered into an agreement with Kineticor Holdings Limited Partnership #2 to indirectly acquire two 230 MW Siemens F class gas turbines and related equipment for $84 million. The transaction also results in the Company assuming long-term non-unit contingent power purchase agreements starting in late 2023 with Shell Energy North America (Canada) (Shell). TransAlta will redeploy these assets to its Sundance site as part of its strategy to repower Sundance Unit 5 to a highly efficient combined cycle unit by integrating these gas turbines into the existing steam turbine at Sundance Unit 5.
This transaction has significant benefits, including:
Advances the Company’s strategy of becoming a low cost, low emissions power generation company;
Significantly reduces TransAlta’s post-2020 merchant risk by securing between 210 MW and 420 MW of long-term power contracts with Shell, a strong investment grade company that is committed to providing more and cleaner energy for Alberta;
Reduces the time to design and construct the repowered combined cycle unit by three to six months;
Results in a lower capital outlay, by approximately $230 million, for the repowered combined cycle strategy;
Provides the Company with more operational flexibility by integrating two gas turbines into one steam turbine (rather than two steam turbines); and
Maintains the option to repower the Keephills 1 unit to a combined cycle unit or to convert the unit to gas via a boiler conversion at a later date, depending in each case on market fundamentals.
The Sundance 5 repowered combined cycle unit will have a capacity of approximately 730 MW and is expected to cost approximately $760 million, well below a greenfield combined cycle project. TransAlta expects to achieve commercial operation in 2023.
“The acquisition advances our repowering strategy in Alberta and increases our contractedness which will help de-risk our business as we move into a fully merchant Alberta market starting in 2021,- said Dawn Farrell, President and Chief Executive Officer of TransAlta. “We are very pleased for the opportunity to have Shell as a major customer and look forward to working with them on this opportunity to provide low cost, clean and reliable power for Albertans.”
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 Information
This news release contains certain information that is forward-looking and is subject to important risks and uncertainties (such statements are usually accompanied by words such as “may”, “will”, “should”, “estimate”, “intend” or other similar words). Specifically, this news release contains forward-looking information with respect to, among other things: the transaction with Kineticor Holdings Limited Partnership #2, including the cost and timing to close; the intention to redeploy the gas turbines to its Sundance site as part of its strategy to repower Sundance Unit 5 to a highly efficient combined cycle unit; integrating the gas turbines into the existing steam turbine;reducing the time to permit, design and construct the repowered combined cycle unit by three to six months; the lower capital outlay of approximately $230 million for the repowered combined cycle strategy, compared to what was discussed during the Company’s Investor Day; provides the Company with more operational flexibility; the plans pertaining to repowering the Keephills 1 unit to a combined cycle unit or the potential conversion of the unit to gas via a boiler conversion at a later date; the Sundance 5 repowered combined cycle having a capacity of approximately 730 MW with an expected cost of approximately $760million; and that commercial operation will be achieved in 2023. All forward-looking information reflect the Company’s beliefs and assumptions based on information available at the time the statements were made and as such are not guarantees of future performance. 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: fluctuations in demand, market prices and the availability of fuel supplies to support the conversion of Sundance Unit 5 into highly efficient combined cycle natural gas units; changes in the current or anticipated legislative, regulatory and political environments; the construction and permitting of the repowering of Sundance Unit 5;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 cautioned not to place undue reliance on this forward-looking information, which is given as of the date it is expressed in this press release. TransAlta 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.
Media Advisory: TransAlta Fourth Quarter and Full Year 2019 Results and Conference Call
The Board of Directors of TransAlta Corporation (TSX: TA) (NYSE: TAC) today declared a quarterly dividend of $0.04 per common share payable on January 1, 2020 to shareholders of record at the close of business on December 2, 2019.
The Board of Directors also declared the following quarterly dividend on its Cumulative Redeemable Rate Reset First Preferred Shares for the period starting from and including September 30, 2019 up to but excluding December 31, 2019:
Preferred Shares
TSX Stock Symbol
Dividend Rate
Dividend Per Share
Record Date
Payment Date
Series A
TA.PR.D
2.709%
$0.16931
December 2, 2019
December 31, 2019
Series B*
TA.PR.E
3.668%
$0.23113
December 2, 2019
December 31, 2019
Series C
TA.PR.F
4.027%
$0.25169
December 2, 2019
December 31, 2019
Series E
TA.PR.H
5.194%
$0.32463
December 2, 2019
December 31, 2019
Series G
TA.PR.J
4.988%
$0.31175
December 2, 2019
December 31, 2019
*Please note the quarterly floating rate on the Series B Preferred Shares will be reset every quarter.
All currency is expressed in Canadian dollars except where noted. When the dividend payment date falls on a weekend or holiday, the payment is made the following business day.
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.
Media Advisory: TransAlta Fourth Quarter and Full Year 2019 Results and Conference Call
TransAlta Corporation (TransAlta) (TSX: TA) (NYSE: TAC) will release its third quarter 2019 results before markets open on Thursday, November 7, 2019. 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 9:00 a.m. Mountain Time (11:00 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 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.
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 and SemCAMS Midstream Announce Agreement to Construct and Own a New Cogeneration Plant in Alberta
TransAlta Corporation (TransAlta) (TSX: TA)(NYSE: TAC) and SemCAMS Midstream ULC (SemCAMS), a subsidiary of SemGroup Corporation (NYSE:SEMG) announce today that they have entered into definitive agreements to develop, construct and operate a new 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 will be jointly owned, operated and maintained with SemCAMS. The capital cost of the new cogeneration facility is expected to be approximately $105 million and the project is expected to deliver approximately $18 million in annual EBITDA. TransAlta will be responsible for all capital costs during construction and, subject to the satisfaction of certain conditions, SemCAMS will purchase a fifty percent (50%) interest in the new cogeneration facility as of the commercial operation date, which is targeted for late 2021.
The highly efficient cogeneration facility will have an installed capacity of 40 MW. All of the steam production and approximately half of the electricity output will be contracted to SemCAMS under a 13-year fixed price contract. The remaining electricity generation will be sold into the Alberta Power market by TransAlta. The agreement contemplates an automatic 7-year extension subject to certain termination rights. The development of the cogeneration facility at Kaybob South No. 3 will eliminate the need for traditional boilers and reduce annual carbon emissions of the operation by approximately 100,000 tonnes CO2e, which is equivalent to removing 20,000 vehicles off Alberta roads.
“We are very pleased to collaborate with SemCAMS on this project which will enhance their operational and energy efficiency through on-site cogeneration,- said Dawn Farrell, President and Chief Executive Officer of TransAlta. “This project represents an important addition to our on-site cogeneration business and we welcome SemCAMS as a valued new customer and partner.”
“We are excited to partner with TransAlta on this highly strategic project which will enable SemCAMS to further reduce the annual carbon emissions from its facility while lowering operating expenses for the Kaybob 3 producers” – said Dave Gosse, President of SemCAMS. “The cogeneration facility is an important addition to SemCAMS growing midstream portfolio and furthers SemCAMS focus on providing reliable, low-cost processing solutions to our customers.”
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.
About SemCAMS
SemCAMS Midstream ULC is a gathering and processing business that provides midstream solutions from the wellhead to the wholesale market place in Western Canada. As one of Alberta’s largest licensed gas processors, SemCAMS Midstream owns and operates six gas processing plants located in the heart of the Western Canadian Sedimentary Basin with combined licensed capacity of approximately 2 billion cubic feet per day. Strategically positioned to accept production out of the Montney and Duvernay area, the assets include more than 700 miles of natural gas gathering and transportation pipelines as well as oil gathering and emulsion. SemCAMS Midstream is based in Calgary, Alberta and is a joint venture between SemGroup Corporation® (NYSE: SEMG) and KKR.
Forward-Looking Statements
This news release contains forward-looking statements and forward-looking information 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 development and construction of the cogeneration facility at the Kaybob South No. 3 sour gas processing plant; the construction and ownership of the cogeneration plant by TransAlta; construction costs being equal to approximately $105 million the delivery of approximately $18 million in annual EBITDA; the acquisition by SemCAMS of a 50% undivided interest in the cogeneration facility on the commercial operation date; the key terms of the definitive agreement and characteristics of the cogeneration plant, including having electricity generating capacity of 40 MW; a portion of the electricity generation being sold into the Alberta market on a merchant basis; the anticipated reduction in CO2e; the anticipated commercial operation date. These statements are based on TransAlta’s and SemCAMS’s beliefs and assumptions based on information available at the time the assumptions were made, including assumptions pertaining to: the operation of the Kaybob South No. 3 sour gas processing plant; the Alberta energy-only market design; the current environmental and carbon regulations; and no significant changes to the labour market in Alberta. 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: failure to obtain necessary regulatory approvals; delays in the construction of the generation facility; increased construction costs; legislative or regulatory developments, including as it pertains to carbon pricing; changes in economic and competitive conditions; changes in the demand and price for natural gas and electricity; and other risk factors contained in the TransAlta’s annual information form and management’s discussion and analysis. Readers are cautioned not to place undue reliance on these forward-looking statements or forward-looking information, which reflect TransAlta’s and SemCAMS’s expectations only as of the date of this news release. TransAlta and SemCAMS disclaim 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.
Media Advisory: TransAlta Fourth Quarter and Full Year 2019 Results and Conference Call
TransAlta Corporation (TransAlta or the Company) (TSX: TA)(NYSE: TAC) announced today that after taking into account all election notices received for the conversion of the Cumulative Redeemable Rate Reset Preferred Shares, Series G (the Series G Shares) into Cumulative Redeemable Floating Rate Preferred Shares, Series H (the Series H Shares), there were only 140,730 Series G Shares tendered for conversion, which is less than the one million shares required to give effect to conversions into Series H Shares. As a result, none of the Series G Shares will be converted into Series H Shares on September 30, 2019.
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. We provide municipalities, medium and large industries, businesses and utility customers clean, affordable, energy efficient, and reliable power. Today, we are 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 we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. We are also 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.
TransAlta Announces Transformative $2 Billion Clean Energy Investment Plan and Dividend Policy
TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) announces today its Clean Energy Investment Plan, which includes converting its existing Alberta coal assets to natural gas and advancing its leadership position in renewable energy. The total cost of the plan is expected to be approximately $2 billion which includes approximately $800 million of renewable energy projects already under construction.
TransAlta’s plan includes converting three of its existing Alberta thermal units to gas in 2020 and 2021 by replacing existing coal burners with natural gas burners. The Company will also convert two of its units to highly efficient combined cycle natural gas units in the late 2023 to late 2024 period. The highlights of these gas conversion investments include:
Positioning TransAlta’s fleet as a low-cost generator in the Alberta energy-only market;
Generating attractive returns by leveraging the Company’s existing infrastructure;
Significantly extending the life and cash flows of the Alberta thermal assets; and
Significantly reducing air emissions and costs.
The Company’s Clean Energy Investment Plan also consists of the four wind projects in the United States and Alberta that are currently under construction. These projects are underpinned by long-term power purchase agreements with highly creditworthy counterparties.
The Clean Energy Investment Plan will be funded from the cash raised earlier this year through the strategic investment with an affiliate of Brookfield Renewable Partners, cash generated from operations, and through TransAlta Renewables Inc. In addition to funding the plan, the Company remains committed to returning up to $250 million to shareholders over the next three years through share repurchases and reducing its corporate level debt by $400 million in 2020.
The Company has adopted, based on TransAlta level deconsolidated cash flows, a Debt/EBITDA target of 3.0x or less, and a dividend policy of returning between 10% and 15% of TransAlta deconsolidated Funds from Operations to common shareholders. The credit metrics and dividend policy are being presented on a deconsolidated basis, allowing investors to understand how the dividends received from TransAlta Renewables is either being returned or invested for TransAlta shareholders.
Investor Day
TransAlta will be hosting an Investor Day later today at 9:30 am ET during which our executive team will discuss the announcements above in greater detail. A link to the presentation and live webcast will be available on the Investors section of TransAlta’s website at https://transalta.com/investors/events-and-presentations.
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. We provide municipalities, medium and large industries, businesses and utility customers clean, affordable, energy efficient, and reliable power. Today, we are 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 we have been recognized by CDP (formerly Climate Disclosure Project) as an industry leader on Climate Change Management. We are also 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.
Forward Looking Information
This news release contains forward-looking statements and forward-looking information within the meaning of applicable securities laws (collectively referred to as “forwarding-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. 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 those set out in the forward-looking statements. More particularly, and without limitation, this news release contains forward-looking statements relating to: the Clean Energy Investment Plan, including the cost and associated timing; the benefits expected to be realized from the Clean Energy Investment Plan; the source of funds for the Clean Energy Investment Plan; the return of capital to shareholders and reduction of corporate debt; satisfying the deconsolidated debt/EBITDA target of 3.0x of less; and implementing or maintaining a dividend policy of returning between 10% and 15% of deconsolidated TransAlta funds from operations. 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: fluctuations in demand, market prices and the availability of fuel supplies to support the conversion of two coal units into highly efficient combined cycle natural gas units; the satisfaction of all closing conditions associated with the $400 million preferred share subscription in October 2020; changes in the current or anticipated legislative, regulatory and political environments; 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. 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.
Non-IFRS Measures
Certain financial measures identified in this news release, including EBITDA and funds from operations (FFO), do not have a standardized meaning under International Financial Reporting Standards (IFRS) and may not be comparable to similar measures presented by other entities. Presenting these items from period to period provides management and investors with the ability to evaluate earnings and cash flow trends more readily in comparison with prior periods results and, in the case of the deconsolidated FFO, to allow shareholders to understand how the dividend at TransAlta Renewables is being either returned or invested for TransAlta shareholders. These measures should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Deconsolidated TransAlta FFO can be reconciled to TransAlta FFO (as defined in the most recently filed Management’s Discussion and Analysis of the Company) by subtracting the funds from operations of TransAlta Renewables, subtracting any distributions made in respect of the Company’s non-controlling interests (namely, to Canadian Power Holdings Inc.) and adding back the dividends received from TransAlta Renewables. For further information on non-IFRS financial measures, see our most recently filed Management’s Discussion and Analysis, filed with Canadian securities regulators on www.sedar.com and the Securities and Exchange Commission on www.edgar.com and the Investor Day presentation dated September 16, 2019 available on the Company’s website investor centre.
