Calpine Corporation (NYSE: CPN):
Summary of First Quarter 2016 Financial Results (in millions, except
per share amounts):
|
|
Three Months Ended March 31,
|
|
|
2016
|
|
2015
|
|
% Change
|
|
|
|
|
|
|
|
|
Operating Revenues
|
|
$
|
1,615
|
|
|
$
|
1,646
|
|
|
(1.9
|
)%
|
Commodity Margin1
|
|
$
|
580
|
|
|
$
|
535
|
|
|
8.4
|
%
|
Adjusted EBITDA1
|
|
$
|
374
|
|
|
$
|
338
|
|
|
10.7
|
%
|
Adjusted Free Cash Flow1
|
|
$
|
102
|
|
|
$
|
25
|
|
|
308.0
|
%
|
Per Share (diluted)
|
|
$
|
0.29
|
|
|
$
|
0.07
|
|
|
314.3
|
%
|
Net Loss, As Adjusted1
|
|
$
|
(104
|
)
|
|
$
|
(62
|
)
|
|
|
Net Loss2
|
|
$
|
(198
|
)
|
|
$
|
(10
|
)
|
|
|
Per Share (diluted)
|
|
$
|
(0.56
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Reaffirming 2016 Full Year Guidance (in millions, except per share
amounts):
|
|
2016
|
|
|
|
Adjusted EBITDA
|
|
$1,800 - 1,950
|
Adjusted Free Cash Flow
|
|
$710 - 860
|
Per Share Estimate (diluted)
|
|
$2.00 - 2.40
|
|
|
|
Recent Achievements:
-
Power Operations:
— Generated approximately 25 million MWh3
in the first quarter of 2016
— Achieved top quartile4
safety metrics: 0.79 total recordable incident rate in the first
quarter of 2016
— Delivered strong first quarter fleetwide
starting reliability: 97.6%
— Geysers wildfire recovery on track
for full capacity with insurance proceeds later this year
-
Customer-Oriented Origination Efforts:
— Expanded Champion
Energy’s New England service territory to commercial and industrial
customers in Maine and Connecticut
— Satisfied final regulatory
approval requirements for the 20-year PPA that will facilitate a 345
MW expansion of our Mankato Power Plant
— Entered into a new
five-year PPA to provide 50 MW of capacity from our RockGen Energy
Center commencing in June 2017, which increases to 100 MW of capacity
commencing in June 2019
-
Portfolio and Balance Sheet Management:
— Reached an agreement
for the sale of South Point Energy Center to Nevada Power Company,
subject to certain conditions, as well as federal and state regulatory
approvals; expected to close no later than first quarter of 2017
—
Corporate Family Rating upgraded by Moody’s Investors Service to Ba3
Calpine Corporation (NYSE: CPN) today reported a first quarter 2016 Net
Loss of $198 million, or $0.56 per diluted share, compared to $10
million, or $0.03 per diluted share, in the prior year period. The
year-over-year increase in Net Loss was primarily due to net non-cash
mark-to-market losses driven by decreases in forward power and natural
gas prices during the first quarter of 2016.
Adjusted EBITDA for the first quarter was $374 million, compared to $338
million in the prior year period, and Adjusted Free Cash Flow was $102
million, or $0.29 per diluted share, compared to $25 million, or $0.07
per diluted share, in the prior year period. The increase in Adjusted
EBITDA was primarily due to higher Commodity Margin driven by higher
contribution from hedges (including retail), higher regulatory capacity
revenue in PJM and ISO-New England and changes in our power plant
portfolio. The increase in Adjusted Free Cash Flow was primarily driven
by a decrease in major maintenance expense associated with our plant
outage schedule, as well as an increase in Adjusted EBITDA, as
previously discussed.
Net Loss, As Adjusted, for the first quarter of 2016 was $104 million
compared to $62 million in the prior year period. The increase in Net
Loss, As Adjusted, was primarily due to an increase in
estimated income tax expense in state jurisdictions where we do not have
net operating losses, and an increase in depreciation and amortization
expense driven largely by power plant portfolio changes, partially
offset by an increase in Commodity Margin, as previously discussed.
“I am pleased to report that first quarter Adjusted EBITDA increased $36
million year-over-year, despite mild winter weather across much of the
country,” said Thad Hill, Calpine’s President and Chief Executive
Officer. “This performance was due to solid operations and effective
hedging, and has kept us on track to reaffirm our full year guidance.
“Our first quarter results demonstrate the continued benefits of our
geographically diverse, flexible and clean generation fleet. These
modern, natural gas-fired power generation resources allow us to be
resilient to low natural gas prices in the near term, while favorably
positioning us for the long term.
“We also remain focused on building and developing our customer
relationships. Over time, we think our customer focus, through both our
Champion Energy retail business and our wholesale origination efforts,
will deliver better results than simply being a price-taker. Since our
last call, we have signed a new five-year contract in the East, expanded
our retail service territory in New England and reached an agreement to
sell our South Point Energy Center in Arizona to a local utility. This
is in addition to the new ten-year toll of our Morgan plant with the
Tennessee Valley Authority that we announced in February.
“The sale of our South Point Energy Center represents progress toward
our stated goal of divesting non-core assets through accretive
transactions,” added Hill. “Subject to certain conditions and regulatory
approvals, we expect this transaction to close no later than the first
quarter of 2017. I would like to recognize the South Point employees for
their dedication and professionalism as members of the Calpine team.
“The South Point sale proceeds, along with proceeds from our previously
announced sale of Osprey Energy Center at the end of this year, will
further enhance our capital allocation flexibility as we continue to
pursue a well-balanced program consisting of growth, capital return and
debt reduction.”
_________
1 Non-GAAP financial measure, see “Regulation G Reconciliations”
for further details.
2 Reported as Net Loss attributable to Calpine on our Consolidated
Condensed Statements of Operations.
3 Includes generation from power plants owned but not operated by
Calpine and our share of generation from unconsolidated power plants.
4 According to EEI Safety Survey (2014).
SUMMARY OF FINANCIAL PERFORMANCE
First Quarter Results
Adjusted EBITDA for the first quarter of 2016 was $374 million compared
to $338 million in the prior year period. The year-over-year increase in
Adjusted EBITDA was primarily related to a $45 million increase in
Commodity Margin, partially offset by an $8 million increase in plant
operating expense5 primarily related to portfolio changes.
The increase in Commodity Margin was primarily due to:
|
|
|
|
|
|
+
|
|
higher contribution from hedges, including retail,
|
|
|
|
|
|
|
+
|
|
higher regulatory capacity revenue in PJM and ISO-NE, and
|
|
|
|
|
|
|
+
|
|
the net impact of our portfolio management activities, including
approximately two months of operation of our 695 MW Granite Ridge
Energy Center, which was acquired on February 5, 2016, and a full
quarter of operation of our 309 MW Garrison Energy Center, which
commenced commercial operation in June 2015, partially offset by
the expiration of the operating lease related to the Greenleaf
power plants in June 2015,
|
|
|
|
|
|
|
–
|
|
a decrease in generation and lower market spark spreads in the West
resulting from lower natural gas prices in the first quarter of 2016
and an increase in hydroelectric generation in California and the
Pacific Northwest in March 2016, and
|
|
|
|
|
|
|
–
|
|
the expiration of a tolling contract associated with our Pastoria
Energy Center in December 2015.
|
Adjusted Free Cash Flow was $102 million in the first quarter of 2016
compared to $25 million in the prior year period. Adjusted Free Cash
Flow increased during the period primarily due to an increase in
Adjusted EBITDA, as previously discussed, and a decrease in major
maintenance expense resulting from our plant outage schedule.
___________
5 Increase in plant operating expense excludes changes in major
maintenance expense, stock-based compensation expense, non-cash loss on
disposition of assets and other costs. See the table titled
“Consolidated Adjusted EBITDA Reconciliation” for the actual amounts of
these items for the three months ended March 31, 2016 and 2015.
REGIONAL SEGMENT REVIEW OF RESULTS
Table 1: Commodity Margin by Segment (in millions)
|
|
Three Months Ended March 31,
|
|
|
2016
|
|
2015
|
|
Variance
|
West
|
|
$
|
197
|
|
|
$
|
218
|
|
|
$
|
(21
|
)
|
Texas
|
|
153
|
|
|
149
|
|
|
4
|
|
East
|
|
230
|
|
|
168
|
|
|
62
|
|
Total
|
|
$
|
580
|
|
|
$
|
535
|
|
|
$
|
45
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
West Region
First Quarter: Commodity Margin in our West segment decreased by
$21 million in the first quarter of 2016 compared to the prior year
period. Primary drivers were:
|
|
|
|
|
|
–
|
|
a decrease in generation and lower market spark spreads resulting
from lower natural gas prices in the first quarter of 2016 and an
increase in hydroelectric generation in California and the Pacific
Northwest in March 2016, and
|
|
|
|
|
|
|
–
|
|
the expiration of a tolling contract associated with our Pastoria
Energy Center in December 2015 and the expiration of the operating
lease related to the Greenleaf power plants in June 2015.
|
Texas Region
First Quarter: Commodity Margin in our Texas segment increased by
$4 million in the first quarter of 2016 compared to the prior year
period. Primary drivers were:
|
|
|
|
|
|
+
|
|
higher contribution from hedges, including retail, partially offset
by
|
|
|
|
|
|
|
–
|
|
lower market spark spreads, primarily resulting from milder weather
in the first quarter of 2016.
|
East Region
First Quarter: Commodity Margin in our East segment increased by
$62 million in the first quarter of 2016 compared to the prior year
period. Primary drivers were:
|
|
|
|
|
|
+
|
|
higher contribution from hedges, including retail,
|
|
|
|
|
|
|
+
|
|
higher regulatory capacity revenue in PJM and ISO-NE, and
|
|
|
|
|
|
|
+
|
|
approximately two months of operation of our 695 MW Granite Ridge
Energy Center, which was acquired on February 5, 2016, and a full
quarter of operation of our 309 MW Garrison Energy Center, which
commenced commercial operations in June 2015, partially offset by
|
|
|
|
|
|
|
–
|
|
a decrease in generation at our legacy power plants due to milder
weather in the first quarter of 2016.
|
LIQUIDITY, CASH FLOW AND CAPITAL RESOURCES
Table 2: Liquidity (in millions)
|
|
March 31, 2016
|
|
December 31, 2015
|
Cash and cash equivalents, corporate(1)
|
|
$
|
183
|
|
|
$
|
850
|
Cash and cash equivalents, non-corporate
|
|
61
|
|
|
56
|
Total cash and cash equivalents
|
|
244
|
|
|
906
|
Restricted cash
|
|
184
|
|
|
228
|
Corporate Revolving Facility availability(2)
|
|
1,364
|
|
|
1,184
|
CDHI letter of credit facility availability
|
|
38
|
|
|
59
|
Total current liquidity availability(3)
|
|
$
|
1,830
|
|
|
$
|
2,377
|
____________
(1) Includes $22 million and $35 million of margin deposits posted
with us by our counterparties at March 31, 2016, and December 31, 2015,
respectively.
(2) On February 8, 2016, we amended our Corporate Revolving
Facility, extending the maturity by two years to June 2020 and
increasing the capacity by an additional $178 million to $1.678 billion
through June 2018, reverting back to $1.520 billion through the maturity
date. Further, we increased the letter of credit sublimit by $250
million to $1.0 billion and extended the maturity by two years to June
2020. Our ability to use availability under our Corporate Revolving
Facility is unrestricted.
(3) Our ability to use corporate cash and cash equivalents is
unrestricted. Our $300 million CDHI letter of credit facility is
restricted to support certain obligations under PPAs, transmission and
natural gas transportation agreements.
Liquidity was approximately $1.8 billion as of March 31, 2016. Cash and
cash equivalents decreased during the first quarter of 2016 primarily
due to the acquisition of Granite Ridge Energy Center, payments to fund
growth projects and other seasonal variations in working capital.
Table 3: Cash Flow Activities (in millions)
|
|
March 31, 2016
|
|
March 31, 2015
|
Beginning cash and cash equivalents
|
|
$
|
906
|
|
|
$
|
717
|
|
Net cash provided by (used in):
|
|
|
|
|
Operating activities
|
|
26
|
|
|
(17
|
)
|
Investing activities
|
|
(611
|
)
|
|
(128
|
)
|
Financing activities
|
|
(77
|
)
|
|
224
|
|
Net increase (decrease) in cash and cash equivalents
|
|
(662
|
)
|
|
79
|
|
Ending cash and cash equivalents
|
|
$
|
244
|
|
|
$
|
796
|
|
|
|
|
|
|
|
|
|
|
Cash provided by operating activities was $26 million in the first
quarter of 2016 compared to cash used in operating activities of $17
million in the prior year. The increase in cash provided by operating
activities was primarily due to an increase in income from operations,
adjusted for non-cash items, and a reduction in debt extinguishment
payments, partially offset by an increase in working capital largely
associated with an increase in net accounts receivable/accounts payable
balances resulting from higher Commodity Margin in the first quarter of
2016.
Cash used in investing activities was $611 million in the first quarter
of 2016 compared to $128 million in the prior year period. The increase
was primarily related to the purchase of Granite Ridge Energy Center for
$527 million, partially offset by a $29 million decrease in capital
expenditures on construction projects and outages.
Cash used in financing activities was $77 million during the first
quarter of 2016 and was primarily related to scheduled repayments of
debt.
CAPITAL ALLOCATION
Our capital allocation philosophy seeks to maximize levered cash returns
to equity on a per share basis while maintaining a strong balance sheet.
We strive to enhance shareholder value through the combination of
investing for growth at attractive returns, managing the balance sheet
through debt pay down and returning capital to shareholders. We view our
stock as an attractive investment opportunity, and we use the projected
returns from share repurchases as the benchmark against which all other
investment decisions are measured. We are committed to remaining
fiscally disciplined and balanced in our capital allocation decisions.
Acquisition of Granite Ridge Energy Center
In February 2016, we completed the purchase of Granite Ridge Energy
Center, a power plant with a nameplate capacity of 745 MW (summer
peaking capacity of 695 MW), for approximately $500 million, excluding
working capital and other adjustments. The addition of this modern,
efficient, natural gas-fired, combined-cycle power plant meaningfully
increased our capacity in the constrained New England market. The power
plant features two combustion turbines, two heat recovery steam
generators and one steam turbine. We funded the acquisition with a
combination of cash on hand and financing obtained in the fourth quarter
of 2015.
Corporate Revolver Extension and Expansion
On February 8, 2016, we amended our Corporate Revolving Facility,
extending the maturity by two years to June 27, 2020, and increasing the
capacity by an additional $178 million to $1.678 billion through June
27, 2018, reverting back to $1.520 billion through the maturity date.
Further, we increased the letter of credit sublimit by $250 million to
$1.0 billion and extended the maturity by two years to June 27, 2020.
Growth and Portfolio Management
East:
Garrison Energy Center: We are in the early stages of development
of a second phase of the Garrison Energy Center that will add
approximately 450 MW of dual-fuel, combined-cycle capacity. PJM has
completed the project’s system impact study and the facilities study is
underway.
York 2 Energy Center: York 2 Energy Center is a 760 MW dual-fuel,
combined-cycle project that will be co-located with our York Energy
Center in Peach Bottom Township, Pennsylvania. Once complete, the power
plant will feature two combustion turbines, two heat recovery steam
generators and one steam turbine. The project’s capacity cleared PJM’s
2017/2018 and 2018/2019 base residual auctions. The project is now under
construction, and we expect commercial operations to commence during the
second quarter of 2017. PJM has completed the interconnection study
process for an additional 68 MW of planned capacity at the York 2 Energy
Center. This incremental 68 MW of planned capacity cleared the 2018/19
base residual auction.
Mankato Power Plant Expansion: By order dated February 5,
2015, the Minnesota Public Utilities Commission concluded a competitive
resource acquisition proceeding and selected a 345 MW expansion of our
Mankato Power Plant, authorizing execution of a 20-year PPA between
Calpine and Xcel Energy. The PPA was executed in April 2015 and
satisfied final regulatory approval requirements in March 2016.
Commercial operation of the expanded capacity is expected by June 1,
2019.
PJM and ISO-NE Development Opportunities: We are currently
evaluating opportunities to develop additional projects in the PJM and
ISO-NE market areas that feature cost-advantages, such as existing
infrastructure and favorable transmission queue positions. These
projects are continuing to advance entitlements (such as permits, zoning
and transmission) for their potential future development when economical.
Osprey Energy Center: We executed an asset sale agreement in the
fourth quarter of 2014 for the sale of our Osprey Energy Center to Duke
Energy Florida, Inc. for approximately $166 million, excluding working
capital and other adjustments, which will be consummated in January 2017
upon the conclusion of a 27-month PPA. The sale has received FERC and
state regulatory approvals and represents a strategic disposition of a
power plant in a wholesale power market dominated by regulated utilities.
Texas:
Guadalupe Peaking Energy Center: In April 2015, we executed an
agreement with Guadalupe Valley Electric Cooperative (“GVEC”) that will
facilitate the construction of a 418 MW natural gas-fired peaking power
plant to be co-located with our Guadalupe Energy Center. Under the terms
of the agreement, construction of the Guadalupe Peaking Energy Center
(“GPEC”) may commence at our discretion, so long as the power plant
reaches commercial operation by June 1, 2019. When the power plant
begins commercial operation, GVEC will purchase a 50% ownership interest
in GPEC. Once built, GPEC will feature two fast-ramping combustion
turbines capable of responding to peaks in power demand. This project
represents a mutually beneficial response to our customer’s desire to
have direct access to peaking generation resources, as it leverages the
benefits of our existing site and development rights and our
construction and operating expertise, as well as our customer’s ability
to fund its investment at attractive rates, all while affording us the
flexibility of timing the plant’s construction in response to market
pricing signals.
West:
South Point Energy Center: On April 1, 2016, we entered into an
asset sale agreement for the sale of substantially all of the assets
comprising our South Point Energy Center to Nevada Power Company d/b/a
NV Energy. The sale is subject to certain conditions precedent, as well
as federal and state regulatory approvals, and is expected to close no
later than the first quarter of 2017. The natural gas-fired,
combined-cycle plant is located on the Fort Mojave Indian Reservation in
Mohave Valley, Arizona, and features a summer peak capacity of 504 MW.
This transaction supports our effort to divest non-core assets outside
our strategic concentration. Financial terms are not being provided at
this time due to confidentiality terms specified in the agreement.
All Segments:
Turbine Modernization: We continue to move forward with our
turbine modernization program. Through March 31, 2016, we have completed
the upgrade of 13 Siemens and eight GE turbines totaling approximately
210 MW and have committed to upgrade three additional turbines. In
addition, we have begun a program to update our dual-fueled turbines at
certain of our East Region power plants.
OPERATIONS UPDATE
First Quarter Power Operations Achievements:
-
Safety Performance:
— Maintained top quartile4 safety
metrics: 0.79 total recordable incident rate
-
Availability Performance:
— Delivered strong fleetwide starting
reliability: 97.6%
-
Power Generation:
— Four gas-fired plants with first quarter
capacity factors greater than 70%: Hermiston, Pasadena, Pine Bluff and
Stony Brook
Geysers Wildfire Impact
In September 2015, a wildfire spread to our Geysers assets in Lake and
Sonoma counties, California. The wildfire affected five of our 14 power
plants in the region, which sustained damage to ancillary structures
such as cooling towers and communication/electric deliverability
infrastructure. Our Geysers assets are currently generating renewable
power for our customers at more than 80% of the normal operating
capacity and will be restored to pre-fire levels once repairs are
completed, which is expected during the third quarter of 2016. We
believe the repair and replacement costs, as well as our net revenue
losses relating to the wildfire, will be limited to our insurance
deductibles of approximately $36 million, all of which was recognized in
2015. Any losses incurred in 2016 related to the wildfire will be
primarily offset by insurance proceeds, when such proceeds are
realizable. We record insurance proceeds in the same financial statement
line as the related loss is incurred. We do not anticipate the impact of
the wildfire or timing of insurance proceeds recovery will have a
material impact on our financial condition, results of operations or
cash flows.
First Quarter Commercial Operations Achievements:
-
Customer Relationships:
East:
—
We entered into a new ten-year PPA with Tennessee Valley Authority to
provide 615 MW of energy and capacity from our Morgan Energy Center
commencing in February 2016.
— Champion Energy expanded its New
England service territory and now offers electricity service to
commercial and industrial customers in Maine and Connecticut.
—
We satisfied final regulatory approval requirements for our 20-year
PPA with Xcel Energy, which will facilitate a 345 MW expansion of our
Mankato Power Plant.
— We entered into a new five-year PPA with a
third party to provide 50 MW of capacity from our RockGen Energy
Center commencing in June 2017, which increases to 100 MW of capacity
commencing in June 2019.
2016 FINANCIAL OUTLOOK
(in millions, except per share amounts)
|
|
|
Full Year 2016
|
Adjusted EBITDA
|
|
$
|
1,800 - 1,950
|
|
Less:
|
|
|
|
Operating lease payments
|
|
|
25
|
|
Major maintenance expense and maintenance capital expenditures(1)
|
|
|
410
|
|
Cash interest, net(2)
|
|
|
635
|
|
Cash taxes
|
|
|
15
|
|
Other
|
|
|
5
|
|
Adjusted Free Cash Flow
|
|
$
|
710 - 860
|
|
Per Share Estimate (diluted)
|
|
$
|
2.00 - 2.40
|
|
|
|
|
|
Debt amortization and repayment (3)
|
|
$
|
(435
|
)
|
Growth capital expenditures (net of debt funding)
|
|
$
|
(285
|
)
|
____________
(1) Includes projected major maintenance expense of $270 million
and maintenance capital expenditures of $140 million in 2016. Capital
expenditures exclude major construction and development projects.
(2) Includes commitment, letter of credit and other fees from
consolidated and unconsolidated investments, net of capitalized interest
and interest income.
(3) Includes $210 million of recurring amortization, as well as
$225 million of proceeds from our 2023 First Lien Term Loan that we
intend to use to repay project and corporate debt.
As detailed above, today we are reaffirming our 2016 guidance. We expect
Adjusted EBITDA of $1.8 billion to $1.95 billion and Adjusted Free Cash
Flow of $710 million to $860 million, or $2.00 to $2.40 per share. We
expect to invest $285 million in our growth projects throughout 2016,
primarily the construction of York 2 Energy Center.
INVESTOR CONFERENCE CALL AND WEBCAST
We will host a conference call to discuss our financial and operating
results for the first quarter on Friday, April 29, 2016, at 10 a.m.
Eastern time / 9 a.m. Central time. A listen-only webcast of the call
may be accessed through our website at www.calpine.com,
or by dialing (800) 446-1671 in the U.S. or (847) 413-3362 outside the
U.S. The confirmation code is 42124995. An archived recording of the
call will be made available for a limited time on our website or by
dialing (888) 843-7419 in the U.S. or (630) 652-3042 outside the U.S.
and providing confirmation code 42124995. Presentation materials to
accompany the conference call will be available on our website on April
29, 2016.
ABOUT CALPINE
Calpine Corporation is America’s largest generator of electricity from
natural gas and geothermal resources. Our fleet of 84 power plants in
operation or under construction represents more than 27,000 megawatts of
generation capacity. Through wholesale power operations and our retail
business, Champion Energy, we serve customers in 21 states and Canada.
We specialize in developing, constructing, owning and operating natural
gas-fired and renewable geothermal power plants that use advanced
technologies to generate power in a low-carbon and environmentally
responsible manner. Our clean, efficient, modern and flexible fleet is
uniquely positioned to benefit from the secular trends affecting our
industry, including the abundant and affordable supply of clean natural
gas, stricter environmental regulation, aging power generation
infrastructure and the increasing need for dispatchable power plants to
successfully integrate intermittent renewables into the grid. Please
visit www.calpine.com
to learn more about why Calpine is a generation ahead - today, or visit www.championenergyservices.com
for details on Champion’s award-winning retail electric services.
Calpine’s Quarterly Report on Form 10-Q for the quarter ended March 31,
2016, has been filed with the Securities and Exchange Commission (SEC)
and is available on the SEC’s website at www.sec.gov.
FORWARD-LOOKING INFORMATION
In addition to historical information, this release contains
“forward-looking statements” within the meaning of the Private
Securities Litigation Reform Act of 1995, Section 27A of the Securities
Act, and Section 21E of the Exchange Act. Forward-looking statements may
appear throughout this release. We use words such as “believe,”
“intend,” “expect,” “anticipate,” “plan,” “may,” “will,” “should,”
“estimate,” “potential,” “project” and similar expressions to identify
forward-looking statements. Such statements include, among others, those
concerning our expected financial performance and strategic and
operational plans, as well as all assumptions, expectations,
predictions, intentions or beliefs about future events. You are
cautioned that any such forward-looking statements are not guarantees of
future performance and that a number of risks and uncertainties could
cause actual results to differ materially from those anticipated in the
forward-looking statements. Such risks and uncertainties include, but
are not limited to:
-
Financial results that may be volatile and may not reflect
historical trends due to, among other things, seasonality of demand,
fluctuations in prices for commodities such as natural gas and power,
changes in U.S. macroeconomic conditions, fluctuations in liquidity
and volatility in the energy commodities markets and our ability and
extent to which we hedge risks;
-
Laws, regulations and market rules in the markets in which we
participate and our ability to effectively respond to changes in laws,
regulations or market rules or the interpretation thereof including
those related to the environment, derivative transactions and market
design in the regions in which we operate;
-
Our ability to manage our liquidity needs, access the capital
markets when necessary and comply with covenants under our First Lien
Notes, Senior Unsecured Notes, Corporate Revolving Facility, First
Lien Term Loans, CCFC Term Loans and other existing financing
obligations;
-
Risks associated with the operation, construction and development
of power plants, including unscheduled outages or delays and plant
efficiencies;
-
Risks related to our geothermal resources, including the adequacy
of our steam reserves, unusual or unexpected steam field well and
pipeline maintenance requirements, variables associated with the
injection of water to the steam reservoir and potential regulations or
other requirements related to seismicity concerns that may delay or
increase the cost of developing or operating geothermal resources;
-
Competition, including from renewable sources of power,
interference by states in competitive power markets through subsidies
or similar support for new or existing power plants, and other risks
associated with marketing and selling power in the evolving energy
markets;
-
Structural changes in the supply and demand of power, resulting
from the development of new fuels or technologies and demand-side
management tools (such as distributed generation, power storage and
other technologies);
-
The expiration or early termination of our PPAs and the related
results on revenues;
-
Future capacity revenue may not occur at expected levels;
-
Natural disasters, such as hurricanes, earthquakes, droughts,
wildfires and floods, acts of terrorism or cyber-attacks that may
impact our power plants or the markets our power plants or retail
operations serve and our corporate headquarters;
-
Disruptions in or limitations on the transportation of natural gas
or fuel oil and the transmission of power;
-
Our ability to manage our customer and counterparty exposure and
credit risk, including our commodity positions;
-
Our ability to attract, motivate and retain key employees;
-
Present and possible future claims, litigation and enforcement
actions that may arise from noncompliance with market rules
promulgated by the SEC, CFTC, FERC and other regulatory bodies; and
-
Other risks identified in this press release, in our Annual Report
on Form 10-K for the year ended December 31, 2015, in our Quarterly
Report on Form 10-Q for the three months ended March 31, 2016, and in
other reports filed by us with the SEC.
Given the risks and uncertainties surrounding forward-looking
statements, you should not place undue reliance on these statements.
Many of these factors are beyond our ability to control or predict. Our
forward-looking statements speak only as of the date of this release.
Other than as required by law, we undertake no obligation to update or
revise forward-looking statements, whether as a result of new
information, future events, or otherwise.
|
CALPINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2016
|
|
2015
|
|
|
(in millions, except share and per share amounts)
|
Operating revenues:
|
|
|
|
|
Commodity revenue
|
|
$
|
1,585
|
|
|
$
|
1,638
|
|
Mark-to-market gain
|
|
25
|
|
|
3
|
|
Other revenue
|
|
5
|
|
|
5
|
|
Operating revenues
|
|
1,615
|
|
|
1,646
|
|
Operating expenses:
|
|
|
|
|
Fuel and purchased energy expense:
|
|
|
|
|
Commodity expense
|
|
1,006
|
|
|
1,077
|
|
Mark-to-market (gain) loss
|
|
120
|
|
|
(67
|
)
|
Fuel and purchased energy expense
|
|
1,126
|
|
|
1,010
|
|
Plant operating expense
|
|
255
|
|
|
260
|
|
Depreciation and amortization expense
|
|
180
|
|
|
158
|
|
Sales, general and other administrative expense
|
|
38
|
|
|
37
|
|
Other operating expenses
|
|
20
|
|
|
20
|
|
Total operating expenses
|
|
1,619
|
|
|
1,485
|
|
(Income) from unconsolidated investments in power plants
|
|
(7
|
)
|
|
(5
|
)
|
Income from operations
|
|
3
|
|
|
166
|
|
Interest expense
|
|
157
|
|
|
154
|
|
Interest (income)
|
|
(1
|
)
|
|
(1
|
)
|
Debt extinguishment costs
|
|
—
|
|
|
19
|
|
Other (income) expense, net
|
|
6
|
|
|
2
|
|
Loss before income taxes
|
|
(159
|
)
|
|
(8
|
)
|
Income tax expense (benefit)
|
|
35
|
|
|
(1
|
)
|
Net loss
|
|
(194
|
)
|
|
(7
|
)
|
Net income attributable to the noncontrolling interest
|
|
(4
|
)
|
|
(3
|
)
|
Net loss attributable to Calpine
|
|
$
|
(198
|
)
|
|
$
|
(10
|
)
|
|
|
|
|
|
Basic and diluted loss per common share attributable to Calpine:
|
|
|
|
|
Weighted average shares of common stock outstanding (in thousands)
|
|
353,501
|
|
|
372,935
|
|
Net loss per common share attributable to Calpine — basic and diluted
|
|
$
|
(0.56
|
)
|
|
$
|
(0.03
|
)
|
|
|
|
|
|
|
|
|
|
CALPINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED BALANCE SHEETS
(Unaudited)
|
|
|
|
|
|
|
|
March 31,
|
|
December 31,
|
|
|
2016
|
|
2015
|
|
|
(in millions, except share and per share amounts)
|
ASSETS
|
|
|
|
|
Current assets:
|
|
|
|
|
Cash and cash equivalents
|
|
$
|
244
|
|
|
$
|
906
|
|
Accounts receivable, net of allowance of $3 and $2
|
|
569
|
|
|
644
|
|
Inventories
|
|
490
|
|
|
475
|
|
Margin deposits and other prepaid expense
|
|
149
|
|
|
137
|
|
Restricted cash, current
|
|
167
|
|
|
216
|
|
Derivative assets, current
|
|
1,853
|
|
|
1,698
|
|
Other current assets
|
|
303
|
|
|
19
|
|
Total current assets
|
|
3,775
|
|
|
4,095
|
|
Property, plant and equipment, net
|
|
13,407
|
|
|
13,012
|
|
Restricted cash, net of current portion
|
|
17
|
|
|
12
|
|
Investments in power plants
|
|
89
|
|
|
79
|
|
Long-term derivative assets
|
|
420
|
|
|
313
|
|
Long-term assets held for sale
|
|
—
|
|
|
130
|
|
Other assets
|
|
951
|
|
|
1,040
|
|
Total assets
|
|
$
|
18,659
|
|
|
$
|
18,681
|
|
LIABILITIES & STOCKHOLDERS’ EQUITY
|
|
|
|
|
Current liabilities:
|
|
|
|
|
Accounts payable
|
|
$
|
433
|
|
|
$
|
552
|
|
Accrued interest payable
|
|
124
|
|
|
129
|
|
Debt, current portion
|
|
205
|
|
|
221
|
|
Derivative liabilities, current
|
|
1,975
|
|
|
1,734
|
|
Other current liabilities
|
|
348
|
|
|
412
|
|
Total current liabilities
|
|
3,085
|
|
|
3,048
|
|
Debt, net of current portion
|
|
11,672
|
|
|
11,716
|
|
Long-term derivative liabilities
|
|
585
|
|
|
473
|
|
Other long-term liabilities
|
|
344
|
|
|
277
|
|
Total liabilities
|
|
15,686
|
|
|
15,514
|
|
|
|
|
|
|
Commitments and contingencies
|
|
|
|
|
Stockholders’ equity:
|
|
|
|
|
Preferred stock, $0.001 par value per share; authorized 100,000,000
shares, none issued and outstanding
|
|
—
|
|
|
—
|
|
Common stock, $0.001 par value per share; authorized 1,400,000,000
shares, 359,542,565 and 356,755,747 shares issued, respectively, and
359,027,395 and 356,662,004 shares outstanding, respectively
|
|
—
|
|
|
—
|
|
Treasury stock, at cost, 515,170 and 93,743 shares, respectively
|
|
(7
|
)
|
|
(1
|
)
|
Additional paid-in capital
|
|
9,602
|
|
|
9,594
|
|
Accumulated deficit
|
|
(6,503
|
)
|
|
(6,305
|
)
|
Accumulated other comprehensive loss
|
|
(177
|
)
|
|
(179
|
)
|
Total Calpine stockholders’ equity
|
|
2,915
|
|
|
3,109
|
|
Noncontrolling interest
|
|
58
|
|
|
58
|
|
Total stockholders’ equity
|
|
2,973
|
|
|
3,167
|
|
Total liabilities and stockholders’ equity
|
|
$
|
18,659
|
|
|
$
|
18,681
|
|
|
|
|
|
|
|
|
|
|
CALPINE CORPORATION AND SUBSIDIARIES
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
|
|
|
|
|
|
Three Months Ended March 31,
|
|
|
2016
|
|
2015
|
|
|
(in millions)
|
Cash flows from operating activities:
|
|
|
|
|
Net loss
|
|
$
|
(194
|
)
|
|
$
|
(7
|
)
|
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
|
|
|
|
|
Depreciation and amortization(1)
|
|
226
|
|
|
171
|
|
Income tax expense
|
|
35
|
|
|
—
|
|
Mark-to-market activity, net
|
|
94
|
|
|
(71
|
)
|
(Income) from unconsolidated investments in power plants
|
|
(7
|
)
|
|
(5
|
)
|
Stock-based compensation expense
|
|
9
|
|
|
11
|
|
Other
|
|
(4
|
)
|
|
(2
|
)
|
Change in operating assets and liabilities, net of effect of
acquisition:
|
|
|
|
|
Accounts receivable
|
|
87
|
|
|
120
|
|
Derivative instruments, net
|
|
(12
|
)
|
|
(17
|
)
|
Other assets
|
|
(19
|
)
|
|
(28
|
)
|
Accounts payable and accrued expenses
|
|
(207
|
)
|
|
(204
|
)
|
Other liabilities
|
|
18
|
|
|
15
|
|
Net cash provided by (used in) operating activities
|
|
26
|
|
|
(17
|
)
|
Cash flows from investing activities:
|
|
|
|
|
Purchases of property, plant and equipment
|
|
(133
|
)
|
|
(162
|
)
|
Purchase of Granite Ridge Energy Center
|
|
(527
|
)
|
|
—
|
|
Decrease in restricted cash
|
|
43
|
|
|
35
|
|
Other
|
|
6
|
|
|
(1
|
)
|
Net cash used in investing activities
|
|
|
(611
|
)
|
|
|
(128
|
)
|
Cash flows from financing activities:
|
|
|
|
|
Repayment of CCFC Term Loans and First Lien Term Loans
|
|
|
(13
|
)
|
|
|
(11
|
)
|
Borrowings under Senior Unsecured Notes
|
|
—
|
|
|
650
|
|
Repurchase of First Lien Notes
|
|
—
|
|
|
(147
|
)
|
Repayments of project financing, notes payable and other
|
|
(56
|
)
|
|
(58
|
)
|
Distribution to noncontrolling interest holder
|
|
(2
|
)
|
|
—
|
|
Financing costs
|
|
(7
|
)
|
|
(11
|
)
|
Stock repurchases
|
|
—
|
|
|
(202
|
)
|
Proceeds from exercises of stock options
|
|
—
|
|
|
3
|
|
Other
|
|
1
|
|
|
—
|
|
Net cash provided by (used in) financing activities
|
|
(77
|
)
|
|
224
|
|
Net increase (decrease) in cash and cash equivalents
|
|
(662
|
)
|
|
79
|
|
Cash and cash equivalents, beginning of period
|
|
906
|
|
|
717
|
|
Cash and cash equivalents, end of period
|
|
$
|
244
|
|
|
$
|
796
|
|
|
|
|
|
|
Cash paid during the period for:
|
|
|
|
|
Interest, net of amounts capitalized
|
|
$
|
150
|
|
|
$
|
146
|
|
Income taxes
|
|
$
|
2
|
|
|
$
|
6
|
|
|
|
|
|
|
Supplemental disclosure of non-cash investing activities:
|
|
|
|
|
Change in capital expenditures included in accounts payable
|
|
$
|
15
|
|
|
$
|
(22
|
)
|
__________
(1) Includes depreciation and amortization included in commodity
revenue, commodity expense and interest expense on our Consolidated
Condensed Statements of Operations.
REGULATION G RECONCILIATIONS
In addition to disclosing financial results in accordance with U.S.
GAAP, the accompanying first quarter 2016 earnings release contains
non-GAAP financial measures. Net Income (Loss), As Adjusted, Commodity
Margin, Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP
financial measures that we use as measures of our performance. These
non-GAAP measures should be viewed as a supplement to and not a
substitute for our U.S. GAAP measures of performance and the financial
results calculated in accordance with U.S. GAAP and reconciliations from
these results should be carefully evaluated.
Net Income (Loss), As Adjusted, represents net income
(loss) attributable to Calpine, adjusted for certain non-cash and
non-recurring items, including mark-to-market (gain) loss on
derivatives, debt modification and extinguishment costs and other
adjustments. Net Income (Loss), As Adjusted, is presented because we
believe it is a useful tool for assessing the operating performance of
our company in the current period. Net Income (Loss), As Adjusted, is
not intended to represent net income (loss), the most comparable U.S.
GAAP measure, as an indicator of operating performance, and is not
necessarily comparable to similarly titled measures reported by other
companies.
Commodity Margin includes our power and steam revenues,
sales of purchased power and physical natural gas, capacity revenue,
revenue from renewable energy credits, sales of surplus emission
allowances, transmission revenue and expenses, fuel and purchased energy
expense, fuel transportation expense, environmental compliance expense,
and realized settlements from our marketing, hedging, optimization and
trading activities, but excludes mark-to-market activity and other
revenues. We believe that Commodity Margin is a useful tool for
assessing the performance of our core operations and is a key
operational measure reviewed by our chief operating decision maker.
Commodity Margin does not intend to represent income from operations,
the most comparable U.S. GAAP measure, as an indicator of operating
performance and is not necessarily comparable to similarly titled
measures reported by other companies.
Adjusted EBITDA represents net income (loss) attributable
to Calpine before net (income) loss attributable to the noncontrolling
interest, interest, taxes, depreciation and amortization, adjusted for
certain non-cash and non-recurring items as detailed in the following
reconciliation. Adjusted EBITDA is not intended to represent cash flows
from operations or net income (loss) as defined by U.S. GAAP as an
indicator of operating performance and is not necessarily comparable to
similarly titled measures reported by other companies.
We believe Adjusted EBITDA is useful to investors and other users of our
financial statements in evaluating our operating performance because it
provides them with an additional tool to compare business performance
across companies and across periods. We believe that EBITDA is widely
used by investors to measure a company’s operating performance without
regard to items such as interest expense, taxes, depreciation and
amortization, which can vary substantially from company to company
depending upon accounting methods and book value of assets, capital
structure and the method by which assets were acquired.
Additionally, we believe that investors commonly adjust EBITDA
information to eliminate the effect of restructuring and other expenses,
which vary widely from company to company and impair comparability. As
we define it, Adjusted EBITDA represents EBITDA adjusted for the effects
of impairment losses, gains or losses on sales, dispositions or
retirements of assets, any mark-to-market gains or losses from
accounting for derivatives, adjustments to exclude the Adjusted EBITDA
related to the noncontrolling interest, stock-based compensation
expense, operating lease expense, non-cash gains and losses from foreign
currency translations, major maintenance expense, gains or losses on the
repurchase, modification or extinguishment of debt, non-cash
GAAP-related adjustments to levelize revenues from tolling agreements
and any extraordinary, unusual or non-recurring items plus adjustments
to reflect the Adjusted EBITDA from our unconsolidated investments. We
adjust for these items in our Adjusted EBITDA as our management believes
that these items would distort their ability to efficiently view and
assess our core operating trends.
In summary, our management uses Adjusted EBITDA as a measure of
operating performance to assist in comparing performance from period to
period on a consistent basis and to readily view operating trends, as a
measure for planning and forecasting overall expectations and for
evaluating actual results against such expectations, and in
communications with our Board of Directors, shareholders, creditors,
analysts and investors concerning our financial performance.
Adjusted Free Cash Flow represents net income before
interest, taxes, depreciation and amortization, as adjusted, less
operating lease payments, major maintenance expense and maintenance
capital expenditures, net cash interest, cash taxes and other
adjustments, including non-recurring items. Adjusted Free Cash Flow is
presented because we believe it is a useful tool for assessing the
financial performance of our company in the current period. Adjusted
Free Cash Flow is a performance measure and is not intended to represent
net income (loss), the most directly comparable U.S. GAAP measure, or
liquidity and is not necessarily comparable to similarly titled measures
reported by other companies.
Net Loss, As Adjusted Reconciliation
The following table reconciles our Net Loss, As Adjusted, to its U.S.
GAAP results for the three months ended March 31, 2016 and 2015 (in
millions):
|
|
Three Months Ended March 31,
|
|
|
2016
|
|
2015
|
Net loss attributable to Calpine
|
|
$
|
(198
|
)
|
|
$
|
(10
|
)
|
Debt extinguishment costs(1)
|
|
—
|
|
|
19
|
|
Mark-to-market (gain) loss on derivatives(1)(2)
|
|
94
|
|
|
(71
|
)
|
Net Loss, As Adjusted
|
|
$
|
(104
|
)
|
|
$
|
(62
|
)
|
__________
(1) Shown net of tax, assuming a 0% effective tax rate for these
items.
(2) In addition to changes in market value on derivatives not
designated as hedges, changes in mark-to-market (gain) loss also
includes hedge ineffectiveness and adjustments to reflect changes in
credit default risk exposure.
Commodity Margin Reconciliation
The following tables reconcile our Commodity Margin to its U.S. GAAP
results for the three months ended March 31, 2016 and 2015 (in millions):
|
|
Three Months Ended March 31, 2016
|
|
|
|
|
|
|
|
|
Consolidation
|
|
|
|
|
|
|
|
|
|
|
And
|
|
|
|
|
West
|
|
Texas
|
|
East
|
|
Elimination
|
|
Total
|
Commodity Margin
|
|
$
|
197
|
|
|
$
|
153
|
|
|
$
|
230
|
|
|
$
|
—
|
|
|
$
|
580
|
|
Add: Mark-to-market commodity activity, net and other(1)
|
|
46
|
|
|
(110
|
)
|
|
(21
|
)
|
|
(6
|
)
|
|
(91
|
)
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Plant operating expense
|
|
91
|
|
|
86
|
|
|
84
|
|
|
(6
|
)
|
|
255
|
|
Depreciation and amortization expense
|
|
69
|
|
|
53
|
|
|
58
|
|
|
—
|
|
|
180
|
|
Sales, general and other administrative expense
|
|
10
|
|
|
16
|
|
|
12
|
|
|
—
|
|
|
38
|
|
Other operating expenses
|
|
8
|
|
|
2
|
|
|
10
|
|
|
—
|
|
|
20
|
|
(Income) from unconsolidated investments in power plants
|
|
—
|
|
|
—
|
|
|
(7
|
)
|
|
—
|
|
|
(7
|
)
|
Income (loss) from operations
|
|
$
|
65
|
|
|
$
|
(114
|
)
|
|
$
|
52
|
|
|
$
|
—
|
|
|
$
|
3
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months Ended March 31, 2015
|
|
|
|
|
|
|
|
|
Consolidation
|
|
|
|
|
|
|
|
|
|
|
And
|
|
|
|
|
West
|
|
Texas
|
|
East
|
|
Elimination
|
|
Total
|
Commodity Margin
|
|
$
|
218
|
|
|
$
|
149
|
|
|
$
|
168
|
|
|
$
|
—
|
|
|
$
|
535
|
|
Add: Mark-to-market commodity activity, net and other(1)
|
|
119
|
|
|
41
|
|
|
(52
|
)
|
|
(7
|
)
|
|
101
|
|
Less:
|
|
|
|
|
|
|
|
|
|
|
Plant operating expense
|
|
106
|
|
|
89
|
|
|
72
|
|
|
(7
|
)
|
|
260
|
|
Depreciation and amortization expense
|
|
67
|
|
|
49
|
|
|
42
|
|
|
—
|
|
|
158
|
|
Sales, general and other administrative expense
|
|
10
|
|
|
17
|
|
|
10
|
|
|
—
|
|
|
37
|
|
Other operating expenses
|
|
10
|
|
|
2
|
|
|
8
|
|
|
—
|
|
|
20
|
|
(Income) from unconsolidated investments in power plants
|
|
—
|
|
|
—
|
|
|
(5
|
)
|
|
—
|
|
|
(5
|
)
|
Income (loss) from operations
|
|
$
|
144
|
|
|
$
|
33
|
|
|
$
|
(11
|
)
|
|
$
|
—
|
|
|
$
|
166
|
|
_________
(1) Includes $(22) million and $(24) million of lease levelization
and $27 million and $4 million of amortization expense for the three
months ended March 31, 2016 and 2015, respectively.
Consolidated Adjusted EBITDA Reconciliation
In the following table, we have reconciled our Adjusted EBITDA and
Adjusted Free Cash Flow to our net income (loss) attributable to Calpine
for the three months ended March 31, 2016 and 2015, as reported under
U.S. GAAP (in millions):
|
|
Three Months Ended March 31,
|
|
|
2016
|
|
2015
|
Net loss attributable to Calpine
|
|
$
|
(198
|
)
|
|
$
|
(10
|
)
|
Net income attributable to the noncontrolling interest
|
|
4
|
|
|
3
|
|
Income tax expense (benefit)
|
|
35
|
|
|
(1
|
)
|
Debt modification and extinguishment costs and other (income)
expense, net
|
|
6
|
|
|
21
|
|
Interest expense, net of interest income
|
|
156
|
|
|
153
|
|
Income from operations
|
|
$
|
3
|
|
|
$
|
166
|
|
Add:
|
|
|
|
|
Adjustments to reconcile income from operations to Adjusted EBITDA:
|
|
|
|
|
Depreciation and amortization expense, excluding deferred financing
costs(1)
|
|
179
|
|
|
157
|
|
Major maintenance expense
|
|
64
|
|
|
78
|
|
Operating lease expense
|
|
6
|
|
|
9
|
|
Mark-to-market (gain) loss on commodity derivative activity
|
|
95
|
|
|
(70
|
)
|
Adjustments to reflect Adjusted EBITDA from unconsolidated
investments and exclude the noncontrolling interest(2)
|
|
5
|
|
|
5
|
|
Stock-based compensation expense
|
|
9
|
|
|
11
|
|
Loss on dispositions of assets
|
|
2
|
|
|
1
|
|
Contract amortization
|
|
27
|
|
|
4
|
|
Other
|
|
(16
|
)
|
|
(23
|
)
|
Total Adjusted EBITDA
|
|
$
|
374
|
|
|
$
|
338
|
|
Less:
|
|
|
|
|
Operating lease payments
|
|
6
|
|
|
9
|
|
Major maintenance expense and capital expenditures(3)
|
|
105
|
|
|
143
|
|
Cash interest, net(4)
|
|
158
|
|
|
155
|
|
Cash taxes
|
|
2
|
|
|
6
|
|
Other
|
|
1
|
|
|
—
|
|
Adjusted Free Cash Flow(5)
|
|
$
|
102
|
|
|
$
|
25
|
|
|
|
|
|
|
Weighted average shares of common stock outstanding (diluted, in
thousands)
|
|
353,501
|
|
|
372,935
|
|
Adjusted Free Cash Flow Per Share (diluted)
|
|
$
|
0.29
|
|
|
$
|
0.07
|
|
_________
(1) Depreciation and amortization expense in the income from
operations calculation on our Consolidated Condensed Statements of
Operations excludes amortization of other assets.
(2) Adjustments to reflect Adjusted EBITDA from unconsolidated
investments include (gain) loss on mark-to-market activity of nil for
the three months ended March 31, 2016 and 2015.
(3) Includes $65 million and $79 million in major maintenance
expense for the three months ended March 31, 2016 and 2015,
respectively, and $40 million and $64 million in maintenance capital
expenditures for the three months ended March 31, 2016 and 2015,
respectively.
(4) Includes commitment, letter of credit and other bank fees from
both consolidated and unconsolidated investments, net of capitalized
interest and interest income.
(5) Excludes increases in working capital of $58 million and $86
million for the three months ended March 31, 2016 and 2015,
respectively. Adjusted Free Cash Flow, as reported, excludes changes in
working capital, such that it is calculated on the same basis as our
guidance.
In the following table, we have reconciled our Adjusted EBITDA to our
Commodity Margin, both of which are non-GAAP measures, for the three
months ended March 31, 2016 and 2015. Reconciliations for both Adjusted
EBITDA and Commodity Margin to comparable U.S. GAAP measures are
provided above. Amounts below are shown exclusive of the noncontrolling
interest (in millions):
|
|
Three Months Ended March 31,
|
|
|
2016
|
|
2015
|
Commodity Margin
|
|
$
|
580
|
|
|
$
|
535
|
|
Other revenue
|
|
5
|
|
|
4
|
|
Plant operating expense(1)
|
|
(181
|
)
|
|
(173
|
)
|
Sales, general and administrative expense(2)
|
|
(33
|
)
|
|
(30
|
)
|
Other operating expenses(3)
|
|
(13
|
)
|
|
(10
|
)
|
Adjusted EBITDA from unconsolidated investments in power plants
|
|
16
|
|
|
14
|
|
Other
|
|
—
|
|
|
(2
|
)
|
Adjusted EBITDA
|
|
$
|
374
|
|
|
$
|
338
|
|
_________
(1) Shown net of major maintenance expense, stock-based
compensation expense, non-cash loss on dispositions of assets and other
costs.
(2) Shown net of stock-based compensation expense and other costs.
(3) Shown net of operating lease expense, amortization and other
costs.
Adjusted EBITDA and Adjusted Free Cash Flow Reconciliation for
Guidance (in millions)
Full Year 2016 Range:
|
|
Low
|
|
High
|
GAAP Net Income (1)
|
$
|
165
|
|
$
|
315
|
Plus:
|
|
|
|
|
Interest expense, net of interest income
|
|
640
|
|
|
640
|
Depreciation and amortization expense
|
|
610
|
|
|
610
|
Major maintenance expense
|
|
265
|
|
|
265
|
Operating lease expense
|
|
25
|
|
|
25
|
Other(2)
|
|
95
|
|
|
95
|
Adjusted EBITDA
|
$
|
1,800
|
|
$
|
1,950
|
Less:
|
|
|
|
|
Operating lease payments
|
|
25
|
|
|
25
|
Major maintenance expense and maintenance capital expenditures(3)
|
|
410
|
|
|
410
|
Cash interest, net(4)
|
|
635
|
|
|
635
|
Cash taxes
|
|
15
|
|
|
15
|
Other
|
|
5
|
|
|
5
|
Adjusted Free Cash Flow
|
$
|
710
|
|
$
|
860
|
_________
(1) For purposes of Net Income guidance reconciliation,
mark-to-market adjustments are assumed to be nil.
(2) Other includes stock-based compensation expense, adjustments to
reflect Adjusted EBITDA from unconsolidated investments, income tax
expense and other items.
(3) Includes projected major maintenance expense of $270 million
and maintenance capital expenditures of $140 million. Capital
expenditures exclude major construction and development projects.
(4) Includes commitment, letter of credit and other bank fees from
both consolidated and unconsolidated investments, net of capitalized
interest and interest income.
OPERATING PERFORMANCE METRICS
The table below shows the operating performance metrics for the periods
presented:
|
|
Three Months Ended March 31,
|
|
|
2016
|
|
2015
|
Total MWh generated (in thousands)(1)(2)
|
|
24,125
|
|
|
25,567
|
|
West
|
|
6,418
|
|
|
7,253
|
|
Texas
|
|
11,249
|
|
|
11,544
|
|
East
|
|
6,458
|
|
|
6,770
|
|
|
|
|
|
|
Average availability(2)
|
|
89.9
|
%
|
|
89.4
|
%
|
West
|
|
90.3
|
%
|
|
88.3
|
%
|
Texas
|
|
86.6
|
%
|
|
88.1
|
%
|
East
|
|
92.8
|
%
|
|
91.7
|
%
|
|
|
|
|
|
Average capacity factor, excluding peakers
|
|
47.4
|
%
|
|
52.0
|
%
|
West
|
|
42.9
|
%
|
|
47.7
|
%
|
Texas
|
|
56.0
|
%
|
|
58.2
|
%
|
East
|
|
40.6
|
%
|
|
47.9
|
%
|
|
|
|
|
|
Steam adjusted heat rate (Btu/kWh)(2)
|
|
7,264
|
|
|
7,262
|
|
West
|
|
7,329
|
|
|
7,301
|
|
Texas
|
|
7,049
|
|
|
7,096
|
|
East
|
|
7,597
|
|
|
7,516
|
|
________
(1) Excludes generation from unconsolidated power plants and power
plants owned but not operated by us.
(2) Generation, average availability and steam adjusted heat rate
exclude power plants and units that are inactive.
View source version on businesswire.com: http://www.businesswire.com/news/home/20160429005251/en/
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