CALGARY,
AB, Aug. 3, 2023 /CNW/ - Second Quarter
2023 Financial Highlights
- Adjusted EBITDA(1) of $100
million
- Free cash flow ("FCF")(1) of $86 million
- Cash available for distribution ("CAFD")(1)(2) of
$49 million or $0.18 per share
- Earnings before income taxes of $17
million
- Cash flow from operating activities of $41 million
Other Business Highlights & Updates
- Entered into a definitive arrangement agreement with TransAlta
Corporation where TransAlta Corporation will acquire all of the
outstanding common shares of TransAlta Renewables subject to the
approval the Company's common shareholders
- Kent Hills rehabilitation program on track, all foundations
have been replaced and 27 turbines have been fully reassembled.
Turbines are being commissioned and returned to service as they are
completed, to date 10 turbines have been placed back in operation
and the remaining turbines are expected to return to service in the
second half of 2023
- Northern Goldfields Solar project has entered its commissioning
phase. All major equipment has been installed and construction work
is largely complete. Energization and testing processes have
commenced and the facility is expected to achieve full commercial
operations in the second half of 2023
- Mount Keith 132kV expansion project is well advanced. The
gas-insulated switchgear will be installed in August and the
project will be operational in the second half of 2023
TransAlta Renewables Inc. ("TransAlta Renewables" or the
"Company") (TSX: RNW) announced today financial results for the
three and six months ended June 30,
2023.
"Overall, this quarter's performance was impacted by lower wind
resources in both Canada and
the United States, higher
unplanned outages in US Wind and Solar and lower water resources.
Given the natural variability of wind and water resources that was
experienced in the first two quarters of 2023, together with the
lower than expected availability performance, our distributable
cash is trending toward the low end of our 2023 outlook." said
Todd Stack, President at TransAlta
Renewables.
"I am pleased that we have reached an arrangement agreement with
TransAlta. This transaction provides RNW shareholders with an
immediate premium and greater growth and cash flow certainty going
forward. We are excited to bring the two companies back together,
resulting in increased scale and enhanced opportunities that will
drive value for our shareholders," added Mr. Stack.
Second Quarter 2023 Highlights
|
$ millions, unless
otherwise stated
|
Three Months
Ended
|
Six Months
Ended
|
|
June 30,
2023
|
June 30,
2022
|
June 30,
2023
|
June 30,
2022
|
|
Renewable energy
production
(GWh)(3)
|
956
|
1,231
|
2,177
|
2,541
|
|
Revenues
|
99
|
139
|
218
|
282
|
|
Adjusted
EBITDA(1)
|
100
|
126
|
228
|
265
|
|
Earnings before income
taxes
|
17
|
18
|
70
|
67
|
|
Free cash
flow(1)
|
86
|
87
|
179
|
195
|
|
Cash available for
distribution(1)
|
49
|
49
|
120
|
139
|
|
Net earnings
attributable to common
shareholders
|
13
|
13
|
58
|
54
|
|
Cash flow from
operating activities
|
41
|
28
|
108
|
131
|
|
Net earnings per share
attributable to
common shareholders, basic and
diluted
|
0.05
|
0.05
|
0.22
|
0.20
|
|
Free cash flow per
share(1),(2)
|
0.32
|
0.33
|
0.67
|
0.73
|
|
Cash available for
distribution per
share(1),(2)
|
0.18
|
0.18
|
0.45
|
0.52
|
|
Dividends declared and
paid per
common share
|
0.23
|
0.23
|
0.47
|
0.47
|
Second Quarter 2023 Results Summary
The Company's renewable energy production for the three and six
months ended June 30, 2023, decreased
by 275 GWh and 364 GWh, respectively, compared to the same periods
in 2022. The decrease in both periods was mainly due to lower
wind resources in both Canada and
the United States, higher
unplanned outages in US Wind and Solar, lower water resources and
the sale of certain Hydro facilities in the fourth quarter of
2022.
Adjusted EBITDA for the three and six months ended June 30, 2023, decreased by $26 million and $37
million, respectively, compared to the same periods in 2022.
The decrease in adjusted EBITDA for both the three and six months
ended June 30, 2023 was a result of
lower renewable energy production, lower environmental credit
sales, lower liquidated damages recorded at the Windrise wind
facility and higher operations, maintenance and administration
("OM&A") expenses due to higher insurance and escalation of
long term service agreement costs.
FCF for the three and six months ended June 30, 2023 decreased by $1 million and $16
million, respectively, compared to the same periods in 2022,
primarily due to lower adjusted EBITDA, partially offset by lower
current income tax expense due to income tax recoveries in the
Australian Gas segment, higher interest income from higher cash
balances and higher market rates, and the settlement of a provision
in Canadian Gas in 2022.
CAFD for the three months ended June 30,
2023 was consistent with the same period in 2022, primarily
due to lower FCF being offset by lower tax equity distributions.
CAFD for the six months ended June 30,
2023 decreased by $19 million
compared to the same period in 2022, primarily due to lower FCF and
higher scheduled principal repayment on the Windrise green bond,
which commenced in the first quarter of 2023.
Net earnings attributable to common shareholders for the three
months ended was consistent with the same period in 2022, while the
six months ended June 30, 2023,
increased by $4 million compared to
the same period in 2022. Both the three and six months ended were
favourably impacted by asset impairment reversals and lower
depreciation, partially offset by lower revenues, lower liquidated
damages at the Windrise wind facility and lower insurance
recoveries in the Canadian Wind segment and higher OM&A
expenses. For the six month period ended, June 30, 2023, finance income related to
subsidiaries of TransAlta was higher due to higher dividends from
Australia in the first quarter of
the year compared to the prior year.
Cash flow from operating activities for the three months ended
June 30, 2023 increased by
$13 million primarily due to
favourable changes in working capital partially offset by lower
revenues and lower liquidated damages in the Canadian Wind segment.
Cash flow from from operating activities for the six months ended
June 30, 2023, decreased by
$23 million compared to the same
periods in 2022 due to lower revenues, lower liquidated damages in
the Canadian Wind segment, and higher OM&A, partially offset by
higher finance income related to subsidiaries of TransAlta and by
favourable changes in working capital. In addition, the prior
periods operating cash flows were lower due to the settlement of
the liquidated damages at Sarnia
within the Canadian Gas segment.
Significant Events and Other Updates
TransAlta to Acquire TransAlta Renewables to Simplify
Structure and Enhance Strategic Position
On July 10, 2023, TransAlta
Renewables Inc. and TransAlta Corporation entered into a definitive
arrangement agreement (the "Agreement") under which TransAlta
Corporation will acquire all of the outstanding common shares of
the Company not already owned, directly or indirectly, by TransAlta
Corporation and certain of its affiliates, subject to the approval
of TransAlta Renewables shareholders.
The transaction will provide shareholders of the combined
company with a single strategy and a clear and compelling
opportunity for long-term growth, with greater clarity around the
execution of the Clean Electricity Growth Plan. TransAlta
Renewables shareholders will benefit from a fair offer reflecting
an attractive premium, a clear and sustainable path going forward,
ownership in an expanded pool of assets and exposure to the
Alberta electricity market.
Under the terms of the Agreement, each TransAlta Renewables
share will be exchanged for, at the election of each holder of
TransAlta Renewables shares, (i) 1.0337 common shares of TransAlta
or (ii) $13.00 in cash. The
consideration payable to TransAlta Renewables shareholders is
subject to pro-rationing based on a maximum aggregate number of
TransAlta shares that may be issued to TransAlta Renewables
shareholders of 46,441,779 and a maximum aggregate amount of cash
of $800 million.
The consideration payable to TransAlta Renewables shareholders
represents an 18.3 per cent premium based on the closing price of
TransAlta Renewables shares on the Toronto Stock Exchange ("TSX")
as of July 10, 2023, and a 13.6 per
cent premium relative to TransAlta Renewables' 20-day
volume-weighted average price per share as of July 10, 2023. The total consideration paid to
TransAlta Renewables shareholders is valued at $1.4 billion on July 10,
2023 of which $800 million
will be paid in cash, and the remaining balance in common shares of
TransAlta. The combined company will operate as TransAlta and
remain listed on the TSX and the New York Stock Exchange ("NYSE"),
under the symbols "TA" and "TAC", respectively.
The TransAlta Renewables Board (with abstentions by
TransAlta-nominated directors) unanimously determined that the
Agreement is in the best interests of the Company and is fair to
TransAlta Renewables shareholders, approved the execution and
delivery of the Agreement and unanimously recommends that
shareholders vote in favour of the Agreement.
Further details of the arrangement will be contained in a
management information circular which is expected to be mailed out
to shareholders on or about August
25, 2023. A special meeting with the Company
shareholders will be held on or about Sept.
26, 2023. If all approvals are received and other closing
conditions satisfied, the transaction is expected to be completed
in early October 2023.
|
Notes
|
|
(1) These items are
not defined and have no standardized meaning under IFRS. Please
refer to the Discussion of Operating Results, Non-IFRS Measures and
Reconciliation of Non-IFRS Measures sections of the MD&A for
further discussion of these items, including, where applicable,
reconciliations to measures calculated in accordance with
IFRS.
|
|
(2) Free cash flow
per share and cash available for distribution per share are
calculated as free cash flow and cash available for distribution,
respectively, divided by the weighted average number of common
shares outstanding during the period of 267 million shares for June
30, 2023 (June 30, 2022 - 267 million shares)
|
|
(3) Includes
production from Canadian Wind, Canadian Hydro and US Wind and Solar
and excludes Canadian, US and Australian gas-fired generation.
Production is not a key revenue driver for gas-fired facilities as
most of their revenues are capacity-based.
|
Non-IFRS Measures
We evaluate our performance using a variety of measures to
provide management and investors with an understanding of our
financial position and results. Certain of the measures discussed
in this earnings release are not defined under IFRS and therefore
should not be considered in isolation, as a substitute for, as an
alternative to, or more meaningful than measures as determined in
accordance with IFRS when assessing our financial performance or
liquidity. These measures have no standardized meaning under IFRS
and may not be comparable to similar measures presented by other
issuers.
The Company's key non-IFRS measures are adjusted EBITDA, FCF and
CAFD.
Adjusted EBITDA
Adjusted EBITDA is an important metric for management since it
represents our core business profitability. Interest, taxes,
depreciation and amortization are not included, as differences in
accounting treatments may distort our core business results. We
present adjusted EBITDA along with operational information of the
assets in which we own an economic interest so that readers can
better understand and evaluate the drivers of those assets in which
we have an economic interest. Since the economic interests are
designed to provide the Company with returns as if we owned the
assets themselves, presenting the operational information and
adjusted EBITDA provides a more complete picture for readers to
understand the underlying nature of the investments and the
resultant cash flows that would otherwise only be presented as
finance income from the investments.
Adjusted EBITDA is composed of our reported EBITDA adjusted to
exclude the impact of unrealized mark-to-market gains and losses,
asset impairments and reversals and certain insurance recoveries,
plus the adjusted EBITDA of the facilities in which we hold an
economic interest, which is the facilities' reported EBITDA
adjusted for: 1) finance lease income and the change in the finance
lease receivable amount; 2) contractually fixed management costs;
3) interest earned on the prepayment of certain transmission costs;
4) the impact of unrealized mark-to-market gains and losses; and 5)
asset impairments and reversals.
Free Cash Flow
FCF represents the amount of cash that is available from
operations and investments in subsidiaries of TransAlta in which we
have an economic interest, to invest in growth initiatives, to make
scheduled principal repayments on debt, repay maturing debt, pay
common share dividends or repurchase common shares. Changes in
working capital are excluded so that FCF is not distorted by
changes that we consider temporary in nature, reflecting, among
other things, the impact of seasonal factors and the timing of
receipts and payments.
FCF is calculated as the cash flow from operating activities
before changes in working capital, less sustaining capital
expenditures, distributions paid to subsidiaries' non-controlling
interest, finance income from economic interests and principal
repayments on lease obligations, plus FCF of the assets owned
through economic interests, which is calculated as adjusted EBITDA
from the economic interests less interest expense, sustaining
capital expenditures, current income tax expense, principal
repayments on lease obligations and working capital and other
timing. FCF per share is calculated using the weighted average
number of common shares outstanding during the period.
Cash Available for Distribution
CAFD can be used as a proxy for the cash that will be available
to common shareholders of the Company. CAFD is calculated as FCF
less tax equity distributions and scheduled principal repayments of
amortizing debt.
Presenting FCF and CAFD helps readers assess our cash flows in
comparison to prior periods. See the Reconciliation of Non-IFRS
Measures sections of the MD&A for additional
information.
Reconciliation of these non-IFRS financial measures to the most
comparable IFRS measure are provided below.
Reconciliation of Non-IFRS Measures
Since the economic interests are designed to provide the Company
with returns as if we owned the assets ourselves, presenting the
operating information and adjusted EBITDA provides a more complete
picture to understand the underlying nature of the investments and
the resultant cash flows that would otherwise only be presented as
finance income from investments.
The following tables reflect adjusted EBITDA and provides
reconciliation to earnings before income taxes for the three months
and six months ended June 30, 2023
and June 30, 2022:
|
Owned
Assets
|
Economic
Interests
|
|
|
|
|
Three months
ended
June 30,
2023
$
millions
|
Canadian
Wind
|
Canadian
Hydro
|
Canadian
Gas
|
Corporate
|
US Wind and
Solar
|
US
Gas
|
Australian
Gas
|
Total
|
Investments in
Economic
Interests Adjustments
|
IFRS
Financials
|
|
Revenues(1)
|
44
|
9
|
46
|
—
|
25
|
6
|
49
|
179
|
(80)
|
99
|
|
Fuel, royalties and
other costs(2)
|
5
|
1
|
17
|
—
|
1
|
2
|
2
|
28
|
(5)
|
23
|
|
Gross margin
|
39
|
8
|
29
|
—
|
24
|
4
|
47
|
151
|
(75)
|
76
|
|
Operations,
maintenance, and administration(3)
|
10
|
3
|
9
|
6
|
5
|
1
|
12
|
46
|
(18)
|
28
|
|
Taxes, other than
income taxes
|
2
|
—
|
—
|
—
|
2
|
—
|
—
|
4
|
(2)
|
2
|
|
Net other operating
loss
|
1
|
—
|
—
|
—
|
—
|
—
|
—
|
1
|
—
|
1
|
|
Adjusted
EBITDA(4)
|
26
|
5
|
20
|
(6)
|
17
|
3
|
35
|
100
|
|
|
|
Depreciation and
amortization
|
|
|
|
|
|
|
|
|
|
(33)
|
|
Asset impairment
reversals
|
|
|
|
|
|
|
|
|
|
10
|
|
Finance income
related to subsidiaries
of TransAlta
|
|
|
|
|
|
|
|
|
|
3
|
|
Interest
income
|
|
|
|
|
|
|
|
|
|
2
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
(12)
|
|
Foreign exchange
gain
|
|
|
|
|
|
|
|
|
|
2
|
|
Earnings before
income tax
|
|
|
|
|
|
|
|
|
|
17
|
|
(1) Adjusted EBITDA
excludes the impact of unrealized mark-to-market gains or losses.
Amounts related to economic interests include finance lease income
adjusted for change in finance lease receivable.
|
|
(2) Amounts related
to economic interests include interest earned on the prepayment of
certain transmission costs.
|
|
(3) Amounts related
to economic interests include the effect of contractually fixed
management costs.
|
|
(4) Adjusted EBITDA
is a non-IFRS measure and has no standardized meaning under
IFRS.
|
|
Owned
Assets
|
Economic
Interests
|
|
|
|
|
Three months
ended June 30,
2022
$
millions
|
Canadian
Wind
|
Canadian
Hydro
|
Canadian
Gas
|
Corporate
|
US Wind and
Solar
|
US
Gas
|
Australian
Gas
|
Total
|
Investments in
Economic
Interests and Adjustments
|
IFRS
Financials
|
|
Revenues(1)
|
57
|
10
|
73
|
—
|
31
|
7
|
42
|
220
|
(81)
|
139
|
|
Fuel, royalties and
other costs(2)
|
5
|
1
|
44
|
—
|
—
|
4
|
1
|
55
|
(5)
|
50
|
|
Gross margin
|
52
|
9
|
29
|
—
|
31
|
3
|
41
|
165
|
(76)
|
89
|
|
Operations,
maintenance, and administration(3)
|
10
|
2
|
9
|
5
|
4
|
1
|
7
|
38
|
(12)
|
26
|
|
Taxes, other than
income taxes
|
2
|
—
|
—
|
—
|
2
|
—
|
—
|
4
|
(2)
|
2
|
|
Net other operating
income
|
(3)
|
—
|
—
|
—
|
—
|
—
|
—
|
(3)
|
(7)
|
(10)
|
|
Adjusted
EBITDA(4)
|
43
|
7
|
20
|
(5)
|
25
|
2
|
34
|
126
|
|
|
|
Depreciation and
amortization
|
|
|
|
|
|
|
|
|
|
(36)
|
|
Asset impairment
charges
|
|
|
|
|
|
|
|
|
|
(11)
|
|
Finance income
related to
subsidiaries of
TransAlta
|
|
|
|
|
|
|
|
|
|
3
|
|
Interest
income
|
|
|
|
|
|
|
|
|
|
1
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
(12)
|
|
Foreign exchange
gain
|
|
|
|
|
|
|
|
|
|
2
|
|
Earnings before
income tax
|
|
|
|
|
|
|
|
|
|
18
|
|
(1) Adjusted EBITDA
excludes the impact of unrealized mark-to-market gains or losses.
Amounts related to economic interests include finance lease income
adjusted for change in finance lease receivable.
|
|
(2) Amounts related
to economic interests include interest earned on the prepayment of
certain transmission costs.
|
|
(3) Amounts related
to economic interests include the effect of contractually fixed
management costs.
|
|
(4) Adjusted EBITDA
is a non-IFRS measure and has no standardized meaning under
IFRS.
|
|
Owned
Assets
|
Economic
Interests
|
|
|
|
|
Six months
ended
June 30,
2023
$
millions
|
Canadian
Wind
|
Canadian
Hydro
|
Canadian
Gas
|
Corporate
|
US Wind and
Solar
|
US
Gas
|
Australian
Gas
|
Total
|
Investments in
economic
interests and adjustments
|
IFRS
financials
|
|
|
Revenues(1)
|
107
|
12
|
99
|
—
|
58
|
12
|
93
|
381
|
(163)
|
218
|
|
|
Fuel, royalties and
other costs(2)
|
8
|
2
|
40
|
—
|
2
|
6
|
3
|
61
|
(11)
|
50
|
|
|
Gross margin
|
99
|
10
|
59
|
—
|
56
|
6
|
90
|
320
|
(152)
|
168
|
|
|
Operations,
maintenance and administration(3)
|
21
|
5
|
17
|
12
|
9
|
2
|
20
|
86
|
(31)
|
55
|
|
|
Taxes, other than
income taxes
|
4
|
1
|
—
|
—
|
3
|
—
|
—
|
8
|
(3)
|
5
|
|
|
Net other operating
income
|
(2)
|
—
|
—
|
—
|
—
|
—
|
—
|
(2)
|
—
|
(2)
|
|
|
Adjusted
EBITDA(4)
|
76
|
4
|
42
|
(12)
|
44
|
4
|
70
|
228
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
|
|
|
|
|
|
(67)
|
|
|
Asset impairment
reversals
|
|
|
|
|
|
|
|
|
|
20
|
|
|
Finance income
related to
subsidiaries of
TransAlta
|
|
|
|
|
|
|
|
|
|
26
|
|
|
Interest
income
|
|
|
|
|
|
|
|
|
|
3
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
(24)
|
|
|
Foreign exchange
gain
|
|
|
|
|
|
|
|
|
|
2
|
|
|
Earnings before
income tax
|
|
|
|
|
|
|
|
|
|
70
|
|
|
(1) Adjusted EBITDA
excludes the impact of unrealized mark-to-market gains or losses.
Amounts related to economic interests include finance lease income
adjusted for change in finance lease receivable.
|
|
(2) Amounts related
to economic interests include interest earned on the prepayment of
certain transmission costs.
|
|
(3) Amounts related
to economic interests include the effect of contractually fixed
management costs.
|
|
(4) Adjusted EBITDA
is a non-IFRS measure and has no standardized meaning under
IFRS.
|
|
Owned
Assets
|
Economic
Interests
|
|
|
|
|
Six months ended
June 30, 2022
|
Canadian
Wind
|
Canadian
Hydro
|
Canadian
Gas
|
Corporate
|
US Wind and
Solar
|
US
Gas
|
Australian
Gas
|
Total
|
Investments in
economic
interests and adjustments
|
IFRS
financials
|
|
Revenues(1)
|
127
|
14
|
142
|
—
|
62
|
13
|
85
|
443
|
(161)
|
282
|
|
Fuel, royalties and
other costs(2)
|
9
|
2
|
84
|
—
|
1
|
7
|
3
|
106
|
(11)
|
95
|
|
Gross margin
|
118
|
12
|
58
|
—
|
61
|
6
|
82
|
337
|
(150)
|
187
|
|
|
|
|
|
|
|
|
|
|
|
|
Operations,
maintenance and administration(3)
|
19
|
4
|
17
|
11
|
8
|
2
|
14
|
75
|
(24)
|
51
|
|
|
|
|
|
|
|
|
|
|
|
|
Taxes, other than
income taxes
|
3
|
—
|
1
|
—
|
3
|
—
|
—
|
7
|
(3)
|
4
|
|
|
|
|
|
|
|
|
|
|
|
|
Net other operating
income
|
(10)
|
—
|
—
|
—
|
—
|
—
|
—
|
(10)
|
(7)
|
(17)
|
|
Adjusted
EBITDA(4)
|
106
|
8
|
40
|
(11)
|
50
|
4
|
68
|
265
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
|
|
|
|
|
|
|
|
|
(73)
|
|
|
|
|
|
|
|
|
|
|
|
|
Asset impairment
charges
|
|
|
|
|
|
|
|
|
|
(11)
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance income related
to subsidiaries of
TransAlta
|
|
|
|
|
|
|
|
|
|
22
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
|
|
|
|
|
|
|
2
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
|
|
|
|
|
|
|
|
|
(25)
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
gain
|
|
|
|
|
|
|
|
|
|
3
|
|
Earnings before
income
tax
|
|
|
|
|
|
|
|
|
|
67
|
|
(1) Adjusted EBITDA
excludes the impact of unrealized mark-to-market gains or losses.
Amounts related to economic interests include finance lease income
adjusted for change in finance lease receivable.
|
|
(2) Amounts related
to economic interests include interest earned on the prepayment of
certain transmission costs.
|
|
(3) Amounts related
to economic interests include the effect of contractually fixed
management costs.
|
|
(4) Adjusted EBITDA
is a non-IFRS measure and has no standardized meaning under
IFRS.
|
Reconciliation of Reported Cash Flow from Operating
Activities to FCF and CAFD
|
Three Months
Ended
|
6 Months
Ended
|
|
$
millions
|
June 30,
2023
|
June 30,
2022
|
June 30,
2023
|
June 30,
2022
|
|
Cash flow from
operating activities
|
41
|
28
|
108
|
131
|
|
Change in non-cash
operating working capital
balances
|
(4)
|
19
|
(2)
|
2
|
|
Cash flow from
operations before changes in
working capital
|
37
|
47
|
106
|
133
|
|
Adjustments:
|
|
|
|
|
|
Sustaining capital
expenditures – owned assets
|
(7)
|
(5)
|
(10)
|
(9)
|
|
Finance income –
economic interests(1)
|
(3)
|
(3)
|
(26)
|
(22)
|
|
Principal
repayments of lease obligations - owned
assets
|
(1)
|
(1)
|
(1)
|
(1)
|
|
FCF - economic
interests(1)
|
60
|
49
|
110
|
94
|
|
FCF(2)
|
86
|
87
|
179
|
195
|
|
Deduct:
|
|
|
|
|
|
Tax equity
distributions
|
(7)
|
(9)
|
(18)
|
(19)
|
|
Principal repayments of
amortizing debt(3)
|
(30)
|
(29)
|
(41)
|
(37)
|
|
CAFD(2)
|
49
|
49
|
120
|
139
|
|
Weighted average number
of common shares
outstanding in the period (millions)
|
267
|
267
|
267
|
267
|
|
FCF per
share(2)
|
0.32
|
0.33
|
0.67
|
0.73
|
|
CAFD per
share(2)
|
0.18
|
0.18
|
0.45
|
0.52
|
|
(1) Refer to the
Reconciliation of FCF to Finance Income Related to Subsidiaries of
TransAlta below in this earnings release.
|
|
(2) These items are
non-IFRS measures and have no standardized meaning under IFRS.
Refer to the Additional IFRS Measures and Non-IFRS Measures
sections for further details.
|
|
(3) Includes owned
assets and economic interests and excludes the Pingston bond
repayment.
|
Reconciliation of FCF to Finance Income Related to
Subsidiaries of TransAlta
The following table is a reconciliation of the finance income
recognized on those assets we hold an economic interest in.
|
Three Months
Ended
|
Six Months
Ended
|
|
$
millions
|
June 30,
2023
|
June 30,
2022
|
June 30,
2023
|
June 30,
2022
|
|
Finance income
related to subsidiaries of
TransAlta
|
3
|
3
|
26
|
22
|
|
Tax equity
distributions
|
7
|
9
|
18
|
19
|
|
Principal repayments of
amortizing debt
|
5
|
5
|
10
|
10
|
|
Return of
capital
|
25
|
22
|
40
|
40
|
|
Effects of changes in
working capital and other timing
|
20
|
10
|
16
|
3
|
|
FCF - economic
interests(1)
|
60
|
49
|
110
|
94
|
|
(1)This item is a
non-IFRS measure and has no standardized meaning under IFRS. Refer
to the Non-IFRS Measures section of this earnings release for
further details.
|
|
Reconciliation of Adjusted EBITDA to FCF and CAFD
The table below bridges our adjusted EBITDA to our FCF and CAFD
for the three months ended June 30,
2023 and 2022:
|
Owned
Assets
|
Economic
Interests
|
|
|
Three months
ended
June 30,
2023
|
Canadian
Wind
|
Canadian
Hydro
|
Canadian
Gas
|
Corporate
|
US Wind
and Solar(1)
|
US
Gas(1)
|
Australian
Gas
|
Total
|
|
Adjusted
EBITDA(1)
|
26
|
5
|
20
|
(6)
|
17
|
3
|
35
|
100
|
|
Provisions and contract
liabilities
|
1
|
—
|
—
|
—
|
—
|
—
|
—
|
1
|
|
Interest
expense
|
—
|
—
|
—
|
(9)
|
(1)
|
—
|
(7)
|
(17)
|
|
Current income tax
(expense)
recovery
|
(4)
|
—
|
—
|
—
|
—
|
—
|
13
|
9
|
|
Sustaining capital
expenditures
|
(3)
|
(1)
|
(3)
|
—
|
(1)
|
—
|
(2)
|
(10)
|
|
Interest
income
|
—
|
—
|
—
|
2
|
—
|
—
|
3
|
5
|
|
Principal repayments
lease obligations
|
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
|
Other
|
—
|
—
|
—
|
(1)
|
—
|
—
|
—
|
(1)
|
|
FCF(2)
|
19
|
4
|
17
|
(14)
|
15
|
3
|
42
|
86
|
|
Deduct:
|
|
|
|
|
|
|
|
|
|
Tax equity
distributions
|
—
|
—
|
—
|
—
|
(7)
|
—
|
—
|
(7)
|
|
Principal repayments
of
amortizing debt
|
(25)
|
—
|
—
|
—
|
—
|
—
|
(5)
|
(30)
|
|
CAFD(2)
|
(6)
|
4
|
17
|
(14)
|
8
|
3
|
37
|
49
|
|
(1) Adjusted EBITDA
is defined in the Additional IFRS Measures and Non-IFRS Measures
sections and reconciled to earnings before income taxes
above.
|
|
(2) FCF and CAFD are
defined in the Additional IFRS Measures and Non-IFRS Measures
sections and reconciled to cash flow from operating activities
above.
|
|
|
Owned
Assets
|
Economic
Interests
|
|
|
Three months
ended
June 30,
2022
|
Canadian
Wind
|
Canadian
Hydro
|
Canadian
Gas
|
Corporate
|
US Wind
and Solar
|
US
Gas
|
Australian
Gas
|
Total
|
|
Adjusted
EBITDA(1)
|
43
|
7
|
20
|
(5)
|
25
|
2
|
34
|
126
|
|
Provisions and contract
liabilities
|
—
|
—
|
(12)
|
—
|
—
|
—
|
—
|
(12)
|
|
Interest
expense
|
—
|
—
|
—
|
(10)
|
(1)
|
—
|
(6)
|
(17)
|
|
Current income tax
expense
|
(1)
|
—
|
—
|
—
|
(1)
|
—
|
(5)
|
(7)
|
|
Realized foreign
exchange gain
|
—
|
—
|
—
|
1
|
—
|
—
|
—
|
1
|
|
Sustaining capital
expenditures
|
(3)
|
—
|
(2)
|
—
|
(1)
|
—
|
—
|
(6)
|
|
Interest
income
|
—
|
—
|
—
|
1
|
—
|
—
|
2
|
3
|
|
Principal repayments
lease
obligations
|
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
|
FCF(2)
|
38
|
7
|
6
|
(13)
|
22
|
2
|
25
|
87
|
|
Deduct:
|
|
|
|
|
|
|
|
|
|
Tax equity
distributions
|
—
|
—
|
—
|
—
|
(9)
|
—
|
—
|
(9)
|
|
Principal repayments
of
amortizing debt
|
(24)
|
—
|
—
|
—
|
—
|
—
|
(5)
|
(29)
|
|
CAFD(2)
|
14
|
7
|
6
|
(13)
|
13
|
2
|
20
|
49
|
|
(1) Adjusted EBITDA
is defined in the Additional IFRS Measures and Non-IFRS Measures
sections and reconciled to earnings before income taxes
above.
|
|
(2) FCF and CAFD are
defined in the Additional IFRS Measures and Non-IFRS Measures
sections and reconciled to cash flow from operating activities
above.
|
|
Owned
Assets
|
Economic
Interests
|
|
|
Six months
ended
June 30,
2023
|
Canadian
Wind
|
Canadian
Hydro
|
Canadian
Gas
|
Corporate
|
US Wind
and Solar
|
US
Gas
|
Australian
Gas
|
Total
|
|
Adjusted
EBITDA(1)
|
76
|
4
|
42
|
(12)
|
44
|
4
|
70
|
228
|
|
Interest
expense
|
—
|
—
|
—
|
(18)
|
(2)
|
—
|
(14)
|
(34)
|
|
Current income tax
(expense)
recovery
|
(12)
|
(2)
|
—
|
—
|
—
|
—
|
7
|
(7)
|
|
Sustaining capital
expenditures
|
(5)
|
(1)
|
(4)
|
—
|
(1)
|
—
|
(4)
|
(15)
|
|
Interest
income
|
—
|
—
|
—
|
3
|
—
|
—
|
6
|
9
|
|
Principal repayments
lease
obligations
|
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
|
Other
|
—
|
—
|
—
|
(1)
|
—
|
—
|
—
|
(1)
|
|
FCF(2)
|
58
|
1
|
38
|
(28)
|
41
|
4
|
65
|
179
|
|
Deduct:
|
|
|
|
|
|
|
|
|
|
Tax equity
distributions
|
—
|
—
|
—
|
—
|
(18)
|
—
|
—
|
(18)
|
|
Principal repayments
of
amortizing
debt
|
(31)
|
—
|
—
|
—
|
—
|
—
|
(10)
|
(41)
|
|
CAFD(2)
|
27
|
1
|
38
|
(28)
|
23
|
4
|
55
|
120
|
|
(1) Adjusted EBITDA
is defined in the Additional IFRS Measures and Non-IFRS Measures
sections and reconciled to earnings before income taxes
above.
|
|
(2) FCF and CAFD are
defined in the Additional IFRS Measures and Non-IFRS Measures
sections and reconciled to cash flow from operating activities
above.
|
|
Owned
Assets
|
Economic
Interests
|
|
|
Six months
ended
June 30,
2022
|
Canadian
Wind
|
Canadian
Hydro
|
Canadian
Gas
|
Corporate
|
US Wind
and Solar
|
US
Gas
|
Australian
Gas
|
Total
|
|
Adjusted
EBITDA(1)
|
106
|
8
|
40
|
(11)
|
50
|
4
|
68
|
265
|
|
Provisions and contract
liabilities
|
(1)
|
—
|
(12)
|
—
|
—
|
—
|
—
|
(13)
|
|
Interest
expense
|
—
|
—
|
—
|
(21)
|
(1)
|
—
|
(12)
|
(34)
|
|
Current income tax
expense
|
(1)
|
—
|
—
|
—
|
(2)
|
—
|
(10)
|
(13)
|
|
Realized foreign
exchange gain
|
—
|
—
|
—
|
1
|
—
|
—
|
—
|
1
|
|
Sustaining capital
expenditures
|
(6)
|
—
|
(3)
|
—
|
(2)
|
—
|
(3)
|
(14)
|
|
Interest
income
|
—
|
—
|
—
|
2
|
—
|
—
|
2
|
4
|
|
Principal repayments
lease
obligations
|
(1)
|
—
|
—
|
—
|
—
|
—
|
—
|
(1)
|
|
FCF(2)
|
97
|
8
|
25
|
(29)
|
45
|
4
|
45
|
195
|
|
Deduct:
|
|
|
|
|
|
|
|
|
|
Tax equity
distributions
|
—
|
—
|
—
|
—
|
(19)
|
—
|
—
|
(19)
|
|
Principal repayments
of
amortizing
debt
|
(27)
|
—
|
—
|
—
|
—
|
—
|
(10)
|
(37)
|
|
CAFD(2)
|
70
|
8
|
25
|
(29)
|
26
|
4
|
35
|
139
|
|
(1) Adjusted EBITDA
is defined in the Additional IFRS Measures and Non-IFRS Measures
sections and reconciled to earnings before income taxes
above.
|
|
(2) FCF and CAFD are
defined in the Additional IFRS Measures and Non-IFRS Measures
sections and reconciled to cash flow from operating activities
above.
|
A complete copy of TransAlta Renewables' second quarter MD&A
and unaudited financial statements are available through TransAlta
Renewables' website at www.transaltarenewables.com or through SEDAR
at www.sedarplus.ca.
About TransAlta Renewables Inc.
TransAlta Renewables is among the largest of any publicly
traded renewable independent power producers ("IPP") in
Canada. Our asset platform and
economic interests are diversified in terms of geography,
generation and counterparties and consist of interests in 26 wind
facilities, 11 hydroelectric facilities, eight natural gas
generation facilities, two solar facilities, one natural gas
pipeline, and one battery storage project, representing an
ownership interest of 2,965 megawatts of net owned generating
capacity, located in the provinces of British Columbia, Alberta, Ontario, Québec, New
Brunswick, the States of Pennsylvania, New
Hampshire, Wyoming,
Massachusetts, Michigan, Minnesota, Washington, North
Carolina, and the State of Western
Australia.
Cautionary Statement Regarding Forward-Looking
Information
This news release contains forward looking statements,
including statements regarding the business and anticipated
financial performance of the Company that are based on the
Company's current expectations, estimates, projections and
assumptions in light of its experience and its perception of
historical trends. In some cases, forward-looking statements can be
identified by terminology such as "plans", "expects", "proposed",
"will", "anticipates", "develop", "continue", and similar
expressions suggesting future events or future performance. In
particular, this news release contains forward-looking statements,
pertaining to, without limitation, the following: the
acquisition by TransAlta of all of the outstanding common shares of
the Company pursuant to the definitive arrangement agreement dated
July 10, 2023, including the benefits
of such transaction and the timing and completion of such
transaction; the remediation of the Kent Hills wind facility,
including the expected timing for return to service and turbine
commissioning; the Mount Keith transmission expansion and Northern
Goldfields construction projects, including timing of commercial
operation; the payment of future dividends and expectations
regarding the amount of such dividends relative to CAFD; timing of
the Company's cash tax horizon in Canada; identifying opportunities to extend
our cash tax horizon; impact on cash available for distribution
absent growth; and ability to meet our 2023
guidance.
The forward-looking statements contained in this news release
are based on current expectations, estimates, projections and
assumptions, having regard to the Company's experience and its
perception of historical trends, and includes, but is not limited
to, expectations, estimates, projections and assumptions relating
to: sufficiency of our budgeted capital expenditures in carrying
out our business plan; applicable laws, regulations and government
policies; the availability and cost of labour, services and
infrastructure; and the satisfaction by third parties of their
obligations, including under power purchase agreements. These
statements are subject to a number of risks and uncertainties that
could cause actual plans, actions and results to differ materially
from current expectations including, but not limited to: our
potential inability to identify accretive growth opportunities or
to fund any such growth opportunities; our potential
inability to acquire operating or development assets from
TransAlta; competitive factors in the renewable power industry;
operational breakdowns, failures, or other disruptions; failure to
meet financial expectations; inability to achieve our ESG targets;
general domestic and international economic and political
developments, including armed hostilities, the threat of terrorism,
cyberattacks, diplomatic developments or other similar events;
equipment failure and our ability to carry out or have completed
the repairs in a cost-effective or timely manner, or at all,
including if the remediation at the Kent Hills wind facilities is
more costly or takes longer than expected; industry risk and
competition; fluctuations in the value of foreign currencies;
counterparty credit risk; changes to our relationship with
TransAlta Corporation; inadequacy or unavailability of insurance
coverage; legal, regulatory and contractual disputes and
proceedings involving the Company; changes in economic and market
conditions; reduced access to the capital markets, including debt,
equity and tax equity; changes in tax, environmental, and other
laws and regulations; adverse weather impacts; legal, regulatory
and contractual disputes and proceedings involving the Company,
including the Kent Hills rehabilitation claim; and other risks and
uncertainties discussed in the Company's materials filed with the
Canadian securities regulatory authorities from time to time and as
also set forth in the Company's MD&A and Annual Information
Form for the year ended December 31,
2022. Readers are cautioned not to place undue reliance on
these forward-looking statements, which reflect the Company's
expectations only as of the date of this news release. The Company
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 noted
otherwise.
SOURCE TransAlta Renewables Inc
