Maxim Power Corp. Announces 2014 Second Quarter Financial and Operating Results
August 05 2014 - 5:37PM
Marketwired Canada
Maxim Power Corp. ("MAXIM" or the "Corporation") (TSX:MXG) announced today the
release of financial and operating results for the second quarter ended June 30,
2014. The unaudited condensed consolidated interim financial statements,
accompanying notes and Management Discussion and Analysis will be available on
SEDAR and on MAXIM's website on August 5, 2014. All figures reported herein are
Canadian dollars unless otherwise stated.
FINANCIAL HIGHLIGHTS
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Three Months Ended Six Months Ended
June 30 June 30
($ in thousands except per share
amounts) 2014 2013 2014 2013
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Revenue $ 19,138 $ 36,383 $ 88,270 $ 91,887
Adjusted EBITDA (1) (3,604) 14,337 12,969 28,404
Adjusted net income (loss) (1) (4,566) 5,720 (751) 10,710
Per share - basic and diluted $ (0.08) $ 0.11 $ (0.01) $ 0.20
Net income (loss) attributable to
shareholders (4,325) 6,446 (838) 11,032
Per share - basic and diluted $ (0.08) $ 0.12 $ (0.02) $ 0.20
FFO (2) (3,922) 13,021 11,079 27,135
Per share - basic and diluted $ (0.07) $ 0.25 $ 0.20 $ 0.51
Electricity Deliveries (MWh) 219,644 191,683 557,865 493,885
Net Generation Capacity (MW) (3) 785 804 785 804
Average Alberta power price -
market ($ per MWh) $ 42.43 $ 123.41 $ 51.46 $ 94.52
Average Alberta power price -
Milner realized ($ per MWh) $ 51.73 $ 178.59 $ 65.06 $ 134.78
Average US power price - Northeast
U.S. realized (US$ per MWh) $ 56.65 $ 97.63 $ 234.02 $ 171.01
(1) Select financial information was derived from the unaudited condensed
consolidated interim financial statements and is prepared in accordance
with IFRS, except adjusted EBITDA and adjusted net income (loss).
Adjusted EBITDA is provided to assist management and investors in
determining the Corporation's approximate operating cash flows before
interest, income taxes, and depreciation and amortization and certain
other income and expenses. Adjusted net income (loss) is used to compare
MAXIM's results among reporting periods without consideration of
unrealized gains and losses and to evaluate MAXIM's performance.
Adjusted EBITDA and adjusted net income (loss) do not have any
standardized meaning prescribed by IFRS and may not be comparable to
similar measures presented by other companies.
(2) Funds from operating activities before changes in working capital
("FFO") is an Additional GAAP measure provided to assist management and
investors in determining the Corporation's cash flows generated by
operations before the cash impact of working capital fluctuations.
(3) Generation capacity is manufacturer's nameplate capacity net of minority
ownership interests of third parties.
OPERATING RESULTS
Revenue, adjusted EBITDA, adjusted net income (loss), net income (loss)
attributable to shareholders and FFO decreased in the second quarter of 2014
when compared to the second quarter of 2013. The decrease in these financial
measures is primarily due to lower power prices in both Alberta and the
Northeast U.S.
On a year to date basis, revenue, adjusted EBITDA, adjusted net income (loss),
net income (loss) attributable to shareholders and FFO decreased in 2014 when
compared to 2013. The decrease in these financial measures is primarily due to
lower power prices in Alberta, partially offset by higher power prices and
generation in the Northeast U.S.
ALBERTA UTILITIES COMMISSION ("AUC") LOSS FACTOR DECISION
As previously reported, the AUC has upheld the complaint made by the Corporation
that the current ISO Line Loss Rules contravene the Transmission Regulation and
are unjust, unreasonable, unduly preferential, arbitrarily or unjustly
discriminatory and inconsistent with or in contravention of the 2003 Electric
Utilities Act (AUC Decision 2014-110). The AUC is proceeding with the second
phase of its consideration of Milner's complaint to determine the relief or
remedy to be given and is expected to issue a process letter during the third
quarter.
FEDERAL ENERGY REGULATORY COMMISSION ("FERC") INQUIRY
As previously reported, MAXIM and its external legal counsel have made a
submission to FERC and FERC's Office of Enforcement refuting the allegations
made in the Office of Enforcement's preliminary findings on this matter. Neither
FERC nor its Office of Enforcement has responded to MAXIM's submission.
SALE OF MAXIM POWER (B.C.) INC.
On July 17, 2014, MAXIM closed the sale of its wholly-owned subsidiary, Maxim
Power (B.C.) Inc. ("Maxim BC") to Village Farms International, Inc. Maxim BC
owns and operates the Vancouver Landfill Power Project, a 7.4 MW electrical and
9.1 MW thermal energy landfill gas cogeneration project in Delta, BC. Proceeds
from the sale are $5.2 million and will be utilized for strategic corporate
purposes. This transaction concludes the sale of MAXIM's investments in British
Columbia, with the sale of MAXIM's other B.C. asset, the Hartland Generating
Facility, in 2013. The sale of these two investments resulted in an approximate
net gain of $128 thousand.
COMAX FRANCE S.A.S. ("COMAX") CAPITAL PROGRAM
COMAX has secured debt financing of $8.8 million (6.0 million Euro) for four of
its five 2014 renovation projects. The terms of the loans are favorable with
leverage ranging from 80% to 91% of the project investment and fixed interest
rates ranging from 3.0% to 4.5%. MAXIM anticipates securing the debt financing
for the fifth project in August 2014. Total 2014 capital expenditures related to
the renovation program in COMAX are anticipated to be $14.4 million (9.8 million
Euro) of which $12.0 million (8.2 million Euro) will be financed with debt.
COMAX has revised the scope of two of its 2014 renovation projects in addition
to deferring two additional renovation projects, originally included in the 2014
renovation program scope, to early 2015.
GROWTH INITIATIVES
Summit Coal Limited Partnership ("SUMMIT")
SUMMIT is MAXIM's development initiative located north of Grande Cache, Alberta
that owns metallurgical coal leases for Mine 14 ("M14") and Mine 16S ("M16S").
This initiative is construction ready and is the most advanced metallurgical
coal mine development project in North America.
Current estimates for M14 are 18.9 million tonnes of low-mid volatile
metallurgical coal reserves with a mine life of 17 years based on the NI 43-101
Technical Report filed on SEDAR on March 21, 2013. M16S is located 30 kilometers
northwest of M14 and represents 1,792 hectares or 29% of SUMMIT's total area of
coal leases. A NI 43-101 Technical Report has not been prepared for the Mine 16S
property. The coal quality of M14 has been tested by numerous potential buyers
and independent labs and is a very coveted mid to low volatility coking coal
with other attributes which are best-in-class.
The Corporation considers the advancement of the M14 and M16S development
projects strategic for MAXIM primarily because of the value of metallurgical
coal and partially due to Milner's ability to utilize tailings and lower quality
fuels, which are by-products of the beneficiation of coal, to produce
electricity. All monetization options including: i) construction, own and
operate, ii) joint venture or iii) outright sale, have been preserved for SUMMIT
and the evaluation of these options is ongoing.
Deerland Peaking Station ("D1")
MAXIM is actively pursuing commercial arrangements that will allow for the
full-scale construction of the 190 MW D1 Station. This project is attractive due
to an anticipated contraction of reliable base load supply in the Alberta power
market. MAXIM had previously received regulatory approvals to construct and
operate D1 and has entered into an agreement to secure firm natural gas
transportation services. The D1 site is located near Bruderheim in Alberta's
Industrial Heartland, and it is in close proximity to the entry point of the
proposed Gateway pipeline and adjacent to the existing Deerland high voltage
substation. This area is expected to experience significant growth in electrical
demand.
Milner Expansion ("M2")
On June 4, 2014, the AUC approved MAXIM's application to convert the fuel source
for the M2 project from coal to natural gas and to increase the generating
capacity of the proposed expansion from 500 MW to 520 MW. The M2 facility would
be adjacent to the existing 150 MW Milner generating facility. The existing
infrastructure at the Milner site allows MAXIM to leverage benefits including
electrical connection, fuel delivery, water licenses and a skilled operations
team. The Corporation incurred costs in 2014 related to engineering and
consulting work for permit amendments and will incur further costs in 2014 on
engineering consultation.
Buffalo Atlee ("B1")
MAXIM acquired the B1 Power Project, situated near Brooks, Alberta, through an
amalgamation with EarthFirst Canada Inc. This project has the potential for
development of over 200 MW of wind generation capacity. Wind data has been
collected on the site for approximately six years and supports project
development based on expected new provincial greenhouse gas legislation and/or
higher power prices than currently forecasted. MAXIM holds an exploratory Crown
land permit with a term of five years, expiring on January 1, 2016. The addition
of wind generation to MAXIM's existing portfolio of assets will diversify
MAXIM's generation fuel types and provide the potential to offset the impact of
expected new provincial greenhouse gas legislation.
CONFERENCE CALL FOR Q2 2014 RESULTS
MAXIM will host a conference call for analysts and investors on Wednesday,
August 6, 2014 at 11:00 am MDT. The call will be hosted by John Bobenic, MAXIM's
President and Chief Executive Officer, and by Mike Mayder, Vice President,
Finance and Chief Financial Officer. To participate in this conference call
please dial (877) 223-4471 or (647) 788-4922 in the Toronto area. It is
recommended that participants call at least ten minutes prior to start time.
A recording of the conference call will be available from August 6, 2014 to
August 13, 2014. To access the replay, dial (800) 585-8367 or (416) 621-4642
followed by the passcode 79725472. In addition, the recording will be available
commencing August 6, 2014 in the Investor Relations section of MAXIM's website
at www.maximpowercorp.com.
About MAXIM
Based in Calgary, Alberta, MAXIM is an independent power producer, which
acquires or develops, owns and operates innovative and environmentally
responsible power and power related projects. MAXIM currently owns and operates
39 power plants in Alberta, the United States and France, having 777 MW of
electric generating capacity. MAXIM trades on the TSX under the symbol "MXG".
For more information about MAXIM, visit our website at www.maximpowercorp.com.
Statements in this release which describe MAXIM's intentions, expectations or
predictions, or which relate to matters that are not historical facts are
forward-looking statements. These forward-looking statements involve known and
unknown risks and uncertainties which may cause the actual results, performances
or achievements of MAXIM to be materially different from any future results,
performances or achievements expressed in or implied by such forward-looking
statements. MAXIM may update or revise any forward-looking statements, whether
as a result of new information, future events or changing market and business
conditions and will update such forward-looking statements as required pursuant
to applicable securities laws.
FOR FURTHER INFORMATION PLEASE CONTACT:
Maxim Power Corp.
John R. Bobenic
President and CEO
(403) 750-9300
Maxim Power Corp.
Michael R. Mayder
Vice President, Finance and CFO
(403) 750-9311
www.maximpowercorp.com
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