First Quarter 2022 Financial
Highlights
- Adjusted EBITDA(1),(2) of $266 million, a decrease of 14% over the same
period in 2021
- Free Cash Flow ("FCF")(1) of $115 million, or $0.42 per share, a decrease of 13% on a per-share
basis from same period in 2021
- Earnings before income taxes of $242
million, an increase of $221
million from the same period in 2021
- Net earnings attributable to common shareholders of
$186 million or $0.69 per share, compared to a loss of
$0.11 per share for the same period
in 2021
- Cash flow from operating activities of $451 million, an increase of $194 million from same period in 2021
Other Business
Highlights
- Announced 200 MW Horizon Hill wind project supplying Meta with
renewable power under a long-term Power Purchase Agreement
("PPA")
- Secured capacity commitment extensions for the three remaining
large industrial customers at the Sarnia cogeneration facility to 2031
- Identified Amazon as the customer at White Rock Wind
Project
- Reached agreement with BHP Nickel West to expand the Mount
Keith transmission system in Western
Australia
- Announced investment in Energy Impact Partners Deep
Decarbonization Frontier Fund 1
- Executed long-term PPA for remaining 30 MWs of capacity at
Garden Plain wind
- Executed share buybacks of $18
million and repurchased 1.4 million common shares
- Provided updated on Kent Hills wind facilities outage
CALGARY,
AB, May 6, 2022 /CNW/ - TransAlta Corporation
("TransAlta" or the "Company") (TSX: TA) (NYSE: TAC) today reported
its financial results for the first quarter ended March 31, 2022.
"TransAlta delivered solid first quarter results for 2022 with
contributions from our new contracted assets at Windrise and North
Carolina Solar which diversified our portfolio. I am also
pleased to confirm that we are on track to deliver our objectives
under our Clean Electricity Growth Plan," said John Kousinioris, President and Chief Executive
Officer.
"We delivered growth in renewable energy to new and existing
customers in all three core geographies of our operations. We
reached final investment decision on our 200 MW Horizon Hill
project in Oklahoma by signing a
long-term PPA with Meta. We fully contracted our Garden Plain
facility by adding another long-term PPA for the remaining 30 MW of
capacity with an investment-grade globally recognized
customer. And in Western
Australia, we reached final investment decision on the Mount
Keith transmission expansion project which will enable the
connection of additional generating capacity to our network and
will support BHP's operations and increase their competitiveness as
a supplier of low-carbon nickel."
Set out below are additional highlights from the quarter on
TransAlta's business activities, including the Company's progress
on advancing its Clean Electricity Growth Plan as well as details
regarding the Company's financial performance and
liquidity.
Key Business
Developments
200 MW Horizon Hill Wind Project
and Fully Executed Corporate PPA with Meta
On April 5, 2022, TransAlta
executed a long-term PPA with a subsidiary of Meta Platforms Inc.,
formerly known as Facebook, Inc. ("Meta"), for 100 per cent
of the generation from its 200 MW Horizon Hill wind project to be
located in Logan County, Oklahoma.
Under this agreement, Meta will receive both renewable electricity
and environmental attributes. The facility will consist of a total
of 34 Vestas turbines with construction expected to begin in late
2022 and a target commercial operation date in the second half of
2023. TransAlta will construct, operate and own the facility. Total
construction capital is estimated at approximately US$290 million to US$310
million and is expected to be financed with a combination of
existing liquidity and tax equity financing. Over 90 per cent of
project costs are captured under executed turbine supply agreements
and engineering, procurement and construction agreements. The
project is expected to generate average annual EBITDA of
approximately US$27 million to
US$30 million inclusive of production
tax credits.
Customer Update at White Rock Wind
Facilities
TransAlta identified Amazon Energy LLC ("Amazon") as the
customer for the 300MW White Rock Wind Projects, to be located in
Caddo County, Oklahoma. On
Dec. 22, 2021, Amazon and TransAlta
entered into two long-term PPAs for the supply of 100 per cent of
the generation from the projects. Construction is expected to begin
in the second half of 2022 with a target commercial operation date
in the second half of 2023.
Energy Impact Partners ("EIP")
Investment
The Company entered into a commitment to invest US$25 million over the next four years in EIP's
Deep Decarbonization Frontier Fund 1 (the "Frontier Fund") that
will invest in early-stage, innovative technology companies that
will accelerate the transition to net-zero greenhouse gas
emissions. TransAlta's investment in the Frontier Fund provides the
Company with the opportunity to identify, pilot, commercialize and
bring to market technologies that will support its decarbonization
goals.
Executed Long Term PPA for
Remaining 30 MW at Garden Plain
The Company has entered into a long-term PPA for the remaining
30 MW of renewable electricity and environmental attributes at the
Garden Plain wind farm in Alberta
with a new investment-grade globally recognized customer. The 130
MW Garden Plain wind project, which was announced in May 2021 with a 100 MW PPA with Pembina Pipeline
Corporation, is now fully contracted with a weighted average
contract life of approximately 17 years. Construction is underway
with a target commercial operation date in the second half of
2022.
Mt. Keith Transmission
Expansion
On May 3, 2022, TransAlta
Renewables exercised its option to acquire an economic interest in
the expansion of the Mt. Keith 132kV transmission system in
Western Australia, to support the
Northern Goldfields-based operations of BHP Nickel West ("BHP").
Total construction capital is estimated at approximately AU$50
million to AU$53 million. Southern Cross Energy, a subsidiary of
the Company, has entered into an engineering, procurement and
construction agreement with ASX-listed GenusPlus Group Ltd
for the expansion. The project is being developed under the
existing PPA with BHP, which has a term of 15 years. It is expected
to be completed in the second half of 2023 and will generate annual
EBITDA in the range of AU$6 million to AU$7 million. In addition,
the planned completion date should allow at least a portion of the
project to qualify for Australia's
"Temporary Full Expensing" COVID-19 tax benefit. The project will
facilitate the connection of additional generating capacity to our
network to support BHP's operations and increase their
competitiveness as a supplier of low-carbon nickel.
Sarnia Cogeneration Facility
Contract Extensions
The Company recently entered into agreements with three of
its large industrial customers at the Sarnia cogeneration facility. The
capacity commitments for the large industrial customers have now
been extended to 2031, at rates comparable to current contract
rates, which, in each case, are subject to the satisfaction of
certain conditions, including the Company entering into a new
contract with the Ontario Independent Electricity System Operator
(the "IESO"). The IESO is conducting a medium-term procurement
process for capacity for 2026 and beyond for existing generation.
The Company has bid into the process, and is seeking to secure a
contract extension for the Sarnia
cogeneration facility following the end of the current IESO
contract expiring on Dec. 31, 2025.
The Company expects the IESO to announce the successful bids in the
third quarter of 2022.
MSCI ESG Rating Upgrade
TransAlta's MSCI ESG Rating was upgraded to 'A' from 'BBB'. The
upgrade reflects the Company's strong renewable energy growth
compared to peers. In 2021, the Company grew its installed
renewable energy capacity by 15 per cent through acquisition and
construction of solar and wind facilities, and secured 600 MW in
additional renewable energy projects. In line with its goal to
reduce carbon emissions by 75 per cent from 2015 emissions levels
by 2026, TransAlta completed coal-to-gas conversions of its
Canadian coal-fired facilities in 2021, nine years ahead of
Alberta's coal phase-out plan.
Kent Hills Wind Facilities
Rehabilitation Progress
During the first quarter of 2022, the extended outage at Kent
Hills 1 and 2 wind facilities continued. Rehabilitation efforts for
the foundations are expected to commence during the second quarter
of 2022 with the aim of fully returning the wind facility to
service during the second half of 2023.
The Kent Hills foundation rehabilitation capital expenditures
were originally estimated to range from $75
million to $100 million. The
current estimate of the capital expenditures is approximately
$120 million, including the cost of
replacing the turbine and tower destroyed during the collapse
experienced in 2021 and contingency. The cost increase is a
result of the adoption of a more robust foundation design,
inflationary cost pressures and an accelerated timeline to return
the turbines to service ahead of December
2023. We are currently in advanced stages of discussions
with New Brunswick Power Corporation and expect to enter into
definitive agreements in the second quarter of 2022. In connection
with the potential events of default that may have occurred under
the trust indenture governing the terms of the bonds secured by,
among other things, the Kent Hills project, Kent Hills Wind LP is
in active negotiations with the trustee and the holders of the
bonds to obtain a waiver and expects that it will enter into a
supplemental indenture during the second quarter of 2022
The Company is actively evaluating any options that may be
available to recover the rehabilitation costs from third parties
and insurance.
Normal Course Issuer Bid
On May 25, 2021, the Toronto Stock
Exchange ("TSX") accepted the notice filed by the Company to
implement a normal course issuer bid ("NCIB") for a portion of our
common shares. During the three months ended March 31, 2022, the Company purchased and
cancelled a total of 1.4 million common shares at an average price
of $12.50 per common share, for a
total capital return of $18
million.
Alberta Electricity
Portfolio
The Alberta electricity
portfolio generated gross margin of $161
million, a decrease of $19
million compared to the same period in 2021. Gross margin
was impacted mainly as a result of weaker market conditions in
February as compared to the same period in 2021. Ancillary services
revenue from the Hydro segment was also lower in February as a
result of these market conditions. In addition, the Gas and
Energy Transition segment results were impacted by lower production
due to higher dispatch optimization in response to market
conditions, and higher gas costs, which was partially offset by our
gas hedge positions, lower carbon costs, and higher realized prices
in Alberta. The decrease in gross
margins were partially offset by higher gross margins in the Wind
and Solar segment mainly due to higher production and higher
realized prices.
The average pool price decreased from $95/MWh for the three months ending March 31, 2021 to $90/MWh for the same period in 2022. Pool prices
were lower on average for the quarter compared to 2021, mainly as a
result of fewer heating degree days as well as fewer planned and
unplanned outages across the provincial gas assets.
Hedged production for the balance of 2022 is 4,890 GWh at an
average price of $73 per MWh.
Liquidity and Financial
Position
The Company continues to maintain a strong financial position in
part due to long-term contracts and hedged positions. At the end of
the first quarter, TransAlta had access to $2.4 billion in liquidity, including $1.2 billion in cash and cash equivalents.
Accelerated Clean Electricity
Growth Plan
On Sept 28, 2021, the Company
announced the strategic targets associated with its Clean
Electricity Growth Plan.
As of May 5, 2022, we have made
significant progress in achieving our growth goals. Refer to the
Strategy and Capability to Deliver Results in the MD&A for
further details.
Clean Electricity
Growth Plan Targets
|
Target
|
% of Target
Achieved
|
Renewable Energy
Capacity
|
2 GW
|
40%
|
Capital
Investment
|
$3 Billion
|
48%
|
Incremental
EBITDA
|
$250 Million
|
55%
|
First Quarter 2022
Highlights
$ millions,
unless otherwise stated
|
3 Months
Ended
|
March 31,
2022
|
March 31,
2021
|
Adjusted availability
(%)
|
89.1
|
88.6
|
Production
(GWh)
|
5,359
|
5,541
|
Revenues
|
735
|
642
|
Adjusted
EBITDA(1)
|
266
|
310
|
Earnings before income
taxes
|
242
|
21
|
Net earnings (loss)
attributable to common shareholders
|
186
|
(30)
|
Cash flow from
operating activities
|
451
|
257
|
FFO(1)
|
186
|
211
|
FCF(1)
|
115
|
129
|
Net earnings (loss) per
share attributable to common shareholders, basic and
diluted
|
0.69
|
(0.11)
|
FFO per
share(1),(2)
|
0.69
|
0.78
|
FCF per
share(1),(2)
|
0.42
|
0.48
|
First Quarter Financial Results
Summary
Adjusted EBITDA(1) for the three months ended
March 31, 2022 was $266 million, a decrease of $44 million, or 14% per cent compared to the same
period in 2021, largely due to lower adjusted EBITDA at our Gas,
Energy Transition, Hydro, and Energy Marketing segments and higher
corporate costs. This was partially offset by higher adjusted
EBITDA at our Wind and Solar segment.
Earnings before income taxes for the three months ended
March 31, 2022 increased by
$221 million compared to the same
period in 2021. Net earnings attributable to common shareholders
for the three months ended March 31,
2022 was $186 million compared
to a net loss of $30 million in the
same period of 2021, an improvement of $216
million. The increase in earnings before income taxes and
net earnings attributable to common shareholders in 2022 was
largely driven by higher revenues from the Alberta Electricity
Portfolio, lower carbon compliance costs and lower depreciation,
mainly as a result of the completion of our coal-to-gas conversions
and retirement of our coal assets compared to the same period in
2021. In addition, an asset impairment reversal driven by discount
rate changes was recognized in 2022 compared to impairment charges
in 2021. The higher net earnings attributable to common
shareholders was also impacted by higher income tax recoveries in
2022.
Cash flow from operating activities for the three months ended
March 31, 2022 was $451 million, an increase of $194 million compared with the same period of
2021, primarily due to favourable changes in non-cash working
capital and higher revenue attributable to the North American Gas
assets, converted gas units and higher revenues in the Wind and
Solar segment as well as lower fuel and purchased power and carbon
compliance costs as the Company transitioned its units to natural
gas.
FCF(1) for the three months ended March 31, 2022, was $115
million, a decrease of $14
million compared with the same period of 2021, driven
primarily by lower adjusted EBITDA, higher distributions paid to
subsidiaries' non-controlling interests, partially offset by a
decrease in sustaining capital spending related to lower planned
maintenance turnarounds.
Segmented
Results
For the three
months ended March 31
($
millions)
|
Adjusted
EBITDA
|
2022
|
2021
|
Hydro
|
61
|
77
|
Wind and
Solar
|
89
|
76
|
Gas
|
102
|
106
|
Energy
Transition
|
5
|
16
|
Energy
Marketing
|
27
|
43
|
Corporate
|
(18)
|
(8)
|
Total
|
266
|
310
|
Hydro:
- Adjusted EBITDA for the three months ended March 31, 2022 decreased by $16 million compared to the same period in 2021,
primarily due to lower ancillary service pricing in the
Alberta market as well as higher
operations, maintenance and administration costs due to increased
insurance and additional costs related to asset optimization of the
Alberta Hydro Assets in the merchant market.
Wind and Solar:
- Adjusted EBITDA for the three months ended March 31, 2022, increased by $13 million compared to the same period in 2021,
primarily due to incremental revenue from the North Carolina Solar
facility and the Windrise wind facility, partially offset by lower
production due to the extended site outage at the Kent Hills 1 and
2 wind facilities and higher transmission costs experienced in the
period. The prior period recognized a reimbursement as a result of
the AESO transmission line loss ruling.
Gas:
- Adjusted EBITDA for the three months ended March 31, 2022 decreased by $4 million compared to the same period in 2021,
mainly due to higher gas prices and natural gas consumption by our
converted units in 2022 and increased provisions. This was
partially offset by higher realized merchant pricing in the
Alberta market, lower carbon costs
associated with the change in fuel ratios as we increased our
natural gas combustion and eliminated production with coal, and
lower legal fees related to the South Hedland PPA contract
settlement.
Energy Transition:
- Adjusted EBITDA for the three months ended March 31, 2022, decreased by $11 million compared to 2021, primarily due to
lower production with the retirement of Keephills Unit 1 and higher
cost of coal at Centralia,
partially offset by lower carbon compliance costs and lower
operating costs with the retirement of the Alberta coal units.
Energy Marketing:
- Adjusted EBITDA for the three months ended March 31, 2022 decreased by $16 million compared to the same period in 2021.
Results for the quarter were in line with expectations from
favourable short-term trading of both physical and financial power
and gas products across all North American markets. The higher
gross margin for the three months ended March 31, 2021, was due to exceptional short-term
volatility in the market. The Energy Marketing team was able to
capitalize on short-term volatility in the markets in which we
trade without materially changing the risk profile of the business
unit.
Corporate:
- Our Corporate overhead costs for the three months ended
March 31, 2022 increased by
$10 million compared to the same
period in 2021. These changes were primarily due to the receipt of
the Canada Emergency Wage Subsidy
funding in 2021 and realized gains in 2021 from the total return
swap on our share-based payment plans.
Conference call
TransAlta will hold a conference call and webcast at
9:00 a.m. MST (11:00 a.m. EST) today, May
6, 2022, to discuss our first quarter 2022 results. The call
will begin with a short address by John
Kousinioris, President and CEO, and Todd Stack, EVP Finance and 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 - First Quarter
2022 Results:
Toll-free North American participants call:
1-888-664-6392
A link to the live webcast will be available on the Investor
Centre section of TransAlta's website at
http://www.transalta.com/investors/events-and-presentations. If you
are unable to participate in the call, the instant replay is
accessible at 1-888-390-0541 (Canada and USA toll free) with TransAlta pass code 261631
followed by the # sign. A transcript of the broadcast will be
posted on TransAlta's website once it becomes available.
Notes (1)
These items are not defined and have no standardized meaning 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.
Please refer to the Segmented Financial Performance and Operating
Results section of the MD&A for further discussion of these
items, including, where applicable, reconciliations to measures
calculated in accordance with IFRS. See also the Additional IFRS
Measures and Non-IFRS Measures section of this earnings
release. (2) Funds from operations ("FFO") per share and
free cash flow ("FCF") per share are calculated using the weighted
average number of common shares outstanding during the period. The
weighted average number of common shares outstanding at March 31,
2022 was 271 million shares (March 31, 2021- 270 million
shares). Please refer to the Additional IFRS Measures and Non-IFRS
Measures section in this earnings release for the purpose of these
non-IFRS ratios.
|
Non-IFRS financial measures and
other specified financial measures
We use a number of financial measures to evaluate our
performance and the performance of our business segments, including
measures and ratios that are presented on a non-IFRS basis, as
described below. Unless otherwise indicated, all amounts are
in Canadian dollars and have been derived from our audited annual
consolidated financial statements prepared in accordance with
IFRS. We believe that these non-IFRS amounts, measures and
ratios, read together with our IFRS amounts, provide readers with a
better understanding of how management assesses results.
Non-IFRS amounts, measures and ratios do not have standardized
meanings under IFRS. They are unlikely to be comparable to
similar measures presented by other companies and should not be
viewed in isolation from, or as an alternative for, or more
meaningful than our IFRS results.
Adjusted EBITDA
In the fourth quarter of 2021, comparable EBITDA was relabelled as
adjusted EBITDA to align with industry standard terminology. Each
business segment assumes responsibility for its operating results
measured to adjusted EBITDA. Adjusted EBITDA is an important metric
for management that represents our core business profitability.
Interest, taxes, depreciation and amortization are not included, as
differences in accounting treatments may distort our core business
results. In addition, certain reclassifications and adjustments are
made to better assess results excluding those items that may not be
reflective of ongoing business performance. This presentation
may facilitate the readers analysis of trends. Adjusted
EBITDA is a non-IFRS measure.
Average Annual EBITDA
Average annual EBITDA is a non-IFRS financial measure that is
forward-looking, used to show the average annual
EBITDA that the project currently under construction is expected to
generate upon completion.
Funds From Operations ("FFO")
FFO is an important metric as it provides a proxy for cash
generated from operating activities before changes in working
capital and provides the ability to evaluate cash flow trends in
comparison with results from prior periods.
FFO is a non-IFRS measure.
Free Cash Flow ("FCF")
FCF is an important metric as it represents the amount of cash that
is available to invest in growth initiatives, make scheduled
principal repayments on debt, repay maturing debt, pay common share
dividends or repurchase common shares. Changes in working capital
are excluded so FFO and FCF are not distorted by changes that we
consider temporary in nature, reflecting, among other things, the
impact of seasonal factors and timing of receipts and payments.
FCF is a non-IFRS measure.
Non-IFRS Ratios
FFO per share, FCF per share and adjusted net debt to adjusted
EBITDA are non-IFRS ratios that are presented in the MD&A. See
the Reconciliation of Cash Flow from Operations to FFO and FCF and
Key Financial Non-IFRS Ratios sections of the MD&A for
additional information.
FFO per share and FCF per share
FFO per share and FCF per share are calculated using the weighted
average number of common shares outstanding during the
period. FFO per share and FCF per share is a non-IFRS
ratio.
Reconciliation of these non-IFRS financial measures to the most
comparable IFRS measure are provided below.
Reconciliation of Non-IFRS
Measures on a Consolidated Basis
The following table reflects adjusted EBITDA and provides
reconciliation to earnings (loss) before income taxes for the three
months ended March 31, 2022 and
March 31, 2021:
3 months ended March
31, 2022
|
Attributable to
common shareholders
|
|
|
|
$
millions
|
Hydro
|
Wind &
Solar(1)
|
Gas
|
Energy
Transition
|
Energy Marketing
|
Corporate
|
Total
|
Equity
accounted
investments(1)
|
Reclass
Adjustments
|
IFRS
Financials
|
Revenues
|
77
|
95
|
434
|
106
|
26
|
1
|
739
|
(4)
|
—
|
735
|
Reclassifications
and adjustments:
|
|
|
|
|
|
|
|
|
|
|
Unrealized mark-to-market (gain) loss
|
—
|
13
|
(162)
|
11
|
10
|
—
|
(128)
|
—
|
128
|
—
|
Decrease in finance lease receivable
|
—
|
—
|
11
|
—
|
—
|
—
|
11
|
—
|
(11)
|
—
|
Finance lease income
|
—
|
—
|
5
|
—
|
—
|
—
|
5
|
|
(5)
|
—
|
Unrealized foreign exchange gain on commodity
|
—
|
—
|
—
|
—
|
(2)
|
—
|
(2)
|
—
|
2
|
—
|
Adjusted
Revenues
|
77
|
108
|
288
|
117
|
34
|
1
|
625
|
(4)
|
114
|
735
|
Fuel and purchased
power
|
4
|
8
|
131
|
94
|
—
|
1
|
238
|
—
|
—
|
238
|
Reclassifications and adjustments:
|
|
|
|
|
|
|
|
|
|
|
Australian interest
income
|
—
|
—
|
(1)
|
—
|
—
|
—
|
(1)
|
—
|
1
|
—
|
Adjusted fuel and
purchased power
|
4
|
8
|
130
|
94
|
—
|
1
|
237
|
—
|
1
|
238
|
Carbon
compliance
|
—
|
—
|
18
|
1
|
—
|
—
|
19
|
—
|
—
|
19
|
Gross margin
|
73
|
100
|
140
|
22
|
34
|
—
|
369
|
(4)
|
113
|
478
|
OM&A
|
11
|
16
|
44
|
16
|
7
|
18
|
112
|
—
|
—
|
112
|
Taxes, other than
income taxes
|
1
|
2
|
4
|
1
|
—
|
—
|
8
|
—
|
—
|
8
|
Net other operating
income
|
—
|
(7)
|
(10)
|
—
|
—
|
—
|
(17)
|
—
|
—
|
(17)
|
Adjusted
EBITDA
|
61
|
89
|
102
|
5
|
27
|
(18)
|
266
|
|
|
|
Equity
income
|
|
|
|
|
|
|
|
|
|
2
|
Finance lease
income
|
|
|
|
|
|
|
|
|
|
5
|
Depreciation and
amortization
|
|
|
|
|
|
|
|
|
|
(117)
|
Asset impairment
reversal
|
|
|
|
|
|
|
|
|
|
42
|
Net interest
expense
|
|
|
|
|
|
|
|
|
|
(67)
|
Foreign exchange gain
and other gains
|
|
|
|
|
|
|
|
|
|
2
|
Earnings before income
taxes
|
|
|
|
|
|
|
|
|
|
242
|
(1) The
Skookumchuck wind facility has been included on a proportionate
basis in the Wind and Solar segment.
|
3 months ended March
31, 2021
|
Attributable to common
shareholders
|
|
|
|
$
millions
|
Hydro
|
Wind &
Solar(1)
|
Gas
|
Energy
Transition
|
Energy Marketing
|
Corporate
|
Total
|
Equity
accounted
investments(1)
|
Reclass
Adjustments
|
IFRS
Financials
|
Revenues
|
89
|
91
|
266
|
139
|
61
|
1
|
647
|
(5)
|
—
|
642
|
Reclassifications
and adjustments:
|
|
|
|
|
|
|
|
|
|
|
Unrealized mark-to-market (gain) loss
|
—
|
5
|
(23)
|
6
|
(8)
|
—
|
(20)
|
—
|
20
|
—
|
Decrease in finance lease receivable
|
—
|
—
|
10
|
—
|
—
|
—
|
10
|
—
|
(10)
|
—
|
Finance lease income
|
—
|
—
|
7
|
—
|
—
|
—
|
7
|
—
|
(7)
|
—
|
Adjusted
Revenues
|
89
|
96
|
260
|
145
|
53
|
1
|
644
|
(5)
|
3
|
642
|
Fuel and purchased
power(2)
|
3
|
4
|
108
|
129
|
—
|
1
|
245
|
—
|
—
|
245
|
Reclassifications
and adjustments:
|
|
|
|
|
|
|
|
|
|
|
Australian interest income
|
—
|
—
|
(1)
|
—
|
—
|
—
|
(1)
|
—
|
1
|
—
|
Mine Depreciation
|
—
|
—
|
(27)
|
(28)
|
—
|
—
|
(55)
|
—
|
55
|
—
|
Coal Inventory write-down
|
—
|
—
|
—
|
(8)
|
—
|
—
|
(8)
|
—
|
8
|
—
|
Adjusted fuel and
purchased power
|
3
|
4
|
80
|
93
|
—
|
1
|
181
|
—
|
64
|
245
|
Carbon
compliance
|
|
|
39
|
11
|
—
|
—
|
50
|
—
|
—
|
50
|
Gross margin
|
86
|
92
|
141
|
41
|
53
|
—
|
413
|
(5)
|
(61)
|
347
|
OM&A(2)
|
8
|
13
|
42
|
23
|
10
|
8
|
104
|
(1)
|
—
|
103
|
Taxes, other than
income taxes
|
1
|
3
|
3
|
2
|
—
|
—
|
9
|
—
|
—
|
9
|
Net other
operating income
|
—
|
—
|
(10)
|
—
|
—
|
—
|
(10)
|
—
|
—
|
(10)
|
Adjusted
EBITDA
|
77
|
76
|
106
|
16
|
43
|
(8)
|
310
|
|
|
|
Equity
income
|
|
|
|
|
|
|
|
|
|
2
|
Finance lease
income
|
|
|
|
|
|
|
|
|
|
7
|
Depreciation and
amortization
|
|
|
|
|
|
|
|
|
|
(149)
|
Asset impairment
charge
|
|
|
|
|
|
|
|
|
|
(29)
|
Net interest
expense
|
|
|
|
|
|
|
|
|
|
(63)
|
Foreign exchange gain
and other gains
|
|
|
|
|
|
|
|
|
|
8
|
Earnings before income
taxes
|
|
|
|
|
|
|
|
|
|
21
|
(1) The Skookumchuck
wind facility has been included on a proportionate basis in the
Wind and Solar segment. (2) $2 million related to station
service costs for the Hydro segment in the three months ended March
31, 2021 was reclassified from operations, maintenance and
administration to fuel and purchased power for comparative
purposes. This did not impact previously reported net
earnings.
|
Reconciliation of Cash flow from
operations to FFO and FCF
The table below reconciles our cash flow from operating
activities to our FFO and FCF:
|
3 Months
Ended
|
$ millions unless
otherwise stated
|
March 31,
2022
|
March 31,
2021
|
Cash flow from
operating activities(1)
|
451
|
257
|
Change in non-cash
operating working capital balances
|
(284)
|
(72)
|
Cash flow from
operations before changes in working capital
|
167
|
185
|
Adjustments
|
|
|
Share of adjusted FFO from joint
venture(1)
|
3
|
4
|
Decrease in finance lease receivable
|
11
|
10
|
Clean energy transition provisions and
adjustments(2)
|
—
|
8
|
Other(3)
|
5
|
4
|
FFO(4)
|
186
|
211
|
Deduct:
|
|
|
Sustaining capital(1)
|
(17)
|
(34)
|
Productivity capital
|
(1)
|
—
|
Dividends paid on preferred shares
|
(10)
|
(10)
|
Distributions paid to subsidiaries' non-controlling
interests
|
(42)
|
(37)
|
Principal payments on lease
liabilities(1)
|
(1)
|
(1)
|
FCF(4)
|
115
|
129
|
Weighted average number
of common shares outstanding in the period
|
271
|
270
|
FFO per
share(4)
|
0.69
|
0.78
|
FCF per
share(4)
|
0.42
|
0.48
|
(1) Includes our
share of amounts for Skookumchuck, an equity accounted joint
venture. (2) Includes write-down on parts and material
inventory for our coal operations in 2021 to net realizable
value. (3) Other consists of production tax
credits which is a reduction to tax equity debt. (4)
These items are not defined and have no standardized meaning under
IFRS. Refer to the Additional IFRS Measures and Non-IFRS Measures
section of this earnings release.
|
The table below bridges our adjusted EBITDA to our FFO and FCF
for the three months ended March 31,
2022 and 2021:
|
3 Months
Ended
|
|
March 31,
2022
|
March 31,
2021
|
Adjusted
EBITDA(1)
|
266
|
310
|
Provisions
|
10
|
(5)
|
Interest
expense(2)
|
(54)
|
(51)
|
Current income tax
expense(2)
|
(12)
|
(23)
|
Realized foreign
exchange gain (loss)
|
2
|
(1)
|
Decommissioning and
restoration costs settled(2)
|
(7)
|
(3)
|
Other non-cash
items(3)
|
(19)
|
(16)
|
FFO(4)
|
186
|
211
|
Deduct:
|
|
|
Sustaining capital(2)
|
(17)
|
(34)
|
Productivity capital
|
(1)
|
—
|
Dividends paid on preferred shares
|
(10)
|
(10)
|
Distributions paid to subsidiaries' non-controlling
interests
|
(42)
|
(37)
|
Principal payments on lease
liabilities(2)
|
(1)
|
(1)
|
FCF(4)
|
115
|
129
|
(1) Adjusted EBITDA
is defined in the Additional IFRS Measures and Non-IFRS Measures
section and reconciled to earnings (loss) before income taxes
above. (2) Includes our share of amounts for
Skookumchuck, an equity accounted joint
venture. (3) Other consists of production tax
credits which is a reduction to tax equity debt. (4) FFO
and FCF are defined in the Additional IFRS Measures and Non-IFRS
Measures section and reconciled to cash flow from operating
activities above.
|
TransAlta is in the process of filing its unaudited interim
Consolidated Financial Statements and accompanying notes, as well
as the associated Management's Discussion & Analysis
("MD&A"). These documents will be available May 6, 2022 on the Investor Centre of TransAlta's
website at www.transalta.com or through SEDAR at www.sedar.com and
EDGAR at www.sec.gov/edgar.shtml.
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
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.
For more information about TransAlta, visit our web site at
transalta.com.
Cautionary Statement Regarding
Forward-Looking Information
This news release contains "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). 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: the Company's growth projects, including
the Horizon Hill wind project, its commercial operation date,
estimated construction capital, average annual EBITDA and ability
to raise tax equity financing; the White
Rock wind projects, including expected commercial operation;
the benefits of the EIP investment; the Garden Plain wind project
currently under construction; the satisfaction of conditions to the
Sarnia cogeneration facility
capacity supply commitments with the large industrial customers;
the Mount Keith transmission project; including that the project
will qualify for a tax benefit, the timing of commercial operation
and the annual expected EBITDA; the Kent Hills rehabilitation,
including total costs, the timeline to return the turbines to
service and ability to enter into commercial arrangements with New
Brunswick Power and the terms thereof; the Clean Electricity Growth
Plan, including the addition of 2 GW of new renewable capacity with
$3 Billion of capital investment and
the incremental EBITDA. 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; inability to
satisfy conditions precedent to the capacity supply commitments
with the large industrial customers at Sarnia; 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; global supply chain
disruptions impacting major maintenance and growth projects;
disruptions in the source of thermal fuels, water, solar or wind
required to operate our facilities, including the necessary natural
gas supply; energy trading risks; failure to obtain necessary
regulatory approvals in a timely fashion, or at all; inability to
satisfy all conditions and requirements associated with announced
growth projects; 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; armed hostilities, including an escalation of the
war in Ukraine; general economic
conditions in the geographic areas where TransAlta operates;
disputes or claims involving TransAlta or TransAlta Renewables; 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, 2021. 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.
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content:https://www.prnewswire.com/news-releases/transalta-reports-first-quarter-2022-results-and-reaches-40-of-renewables-growth-target-301541541.html
SOURCE TransAlta Corporation