- Published: 29 January 2009
- Written by Editor
TransAlta achieves record cash flow and double digit comparable earnings per share growth for the year
- 2008 comparable(i) earnings per share increased 11 per cent to $1.46 versus $1.31 in 2007 - Cash flow from operations was over $1 billion for the year - Balance sheet remains strong; $1.4 billion in available liquidity - Fully commissioned the 96 megawatt (MW) Kent Hills Wind Farm on time and on budget - Announces two efficiency uprates at its Keephills facility for a total capacity addition of 46 MW
TransAlta Corporation (TransAlta) (TSX: TA) (NYSE: TAC) today reported 2008 comparable earnings of $290 million ($1.46 per share) versus $264 million ($1.31 per share) in 2007. Net earnings for the year were $235 million ($1.18 per share) compared to $309 million ($1.53 per share) in 2007.
Improved comparable results were driven by higher electricity prices in Alberta and the Pacific Northwest, greater merchant production, and increased Energy Trading gross margins. These gains were partially offset by lower Generation gross margins due to higher unplanned outages at Alberta Thermal and the unplanned outage at Genesee 3 as a result of a turbine blade failure.
"TransAlta delivered record cash flow from operations and achieved its goal of delivering low double digit comparable earnings per share growth," said Steve Snyder, TransAlta's President and CEO. "This demonstrates the strength and flexibility we have built up across our businesses."
Net earnings for the year were lower primarily due to the after-tax equity loss of $62 million related to the write-down of TransAlta's Mexico business and higher income taxes for the corporation. Net earnings in 2007 included a one-time gain of approximately $48 million ($0.24 per share) resulting from a reduction in the Canadian federal corporate income tax rate.
Cash flow from operations for the year ended Dec. 31, 2008 was $1,038 million, compared to $847 million for the year ended Dec. 31, 2007. The increase in cash flow from operations in 2008 was driven by higher cash earnings and favourable movements in working capital. In 2008 TransAlta also received 13 Power Purchase Agreement (PPA) payments compared to 12 payments in 2007.
TransAlta's balance sheet and financial ratios remain strong and it maintains stable investment grade credit ratings. The company has $2.2 billion of committed credit facilities and as of Dec. 31, 2008, $1.4 billion was available.
(i)Presenting comparable earnings from period to period is provided to help management and shareholders evaluate earnings trends more readily in comparison with prior periods' results. An explanation and reconciliation of this non-GAAP financial measure can be found beginning on page 29 of the expanded news release.
"Our strong financial position and discipline provides us with the platform to help navigate through the difficult market conditions ahead of us," Snyder said. "Our focus for 2009 will be to maintain our financial liquidity while we improve availability at our Alberta Thermal operations and continue to contain costs in the face of recessionary markets."
In the fourth quarter 2008, TransAlta reported comparable earnings of $79 million ($0.40 per share) compared to $103 million ($0.51 per share) in the fourth quarter 2007.
The decrease in comparable earnings was driven by lower Generation gross margins due to higher planned and unplanned outages at Alberta Thermal, and the unplanned outage at Genesee 3. This was partially offset by an increase in interest income as a result of a favourable tax assessment.
Net earnings for the fourth quarter 2008 were $94 million ($0.47 per share) compared to $130 million ($0.64 per share) in the fourth quarter of 2007. Net earnings were lower primarily due to the reduction in the Canadian federal corporate income tax rate in the fourth quarter of 2007.
Cash flow from operations in the fourth quarter of 2008 was $428 million, an increase of $236 million compared to $192 million earned in the same quarter in 2007. The increase was driven by higher PPA payments received in the quarter and other favourable changes in working capital.
Fleet availability for the year was 85.8 per cent compared to 87.2 per cent in 2007. The decrease in availability is attributed to the higher unplanned outages at Alberta Thermal and Genesee 3 and the planned outage at Centralia Thermal. This was partially offset by lower derates at Centralia Thermal. Fleet availability for the fourth quarter decreased to 86.2 per cent compared to 91.8 per cent in the fourth quarter of 2007 due to higher planned and unplanned outages.
On Dec. 31, 2008 TransAlta began commercial operations of its 96 MW, $170 million Kent Hills Wind Farm. Kent Hills, under a 25 year power purchase agreement with New Brunswick Power, will provide 280,000 megawatt hours per year - enough electricity to meet the needs of approximately 17,300 homes.
Subsequent Events
TransAlta announced today it is proceeding with the addition of two 23 MW efficiency uprates at its Keephills plant in Alberta. Both Keephills units 1 and 2 will be upgraded to 406 MW and are expected to be operational by the end of 2011 and 2012, respectively. The total capital cost of the projects is estimated at $68 million.
Fourth Quarter and 12 Months Ended Dec. 31 2008 Highlights:
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3 months 3 months 12 months 12 months
ended ended ended ended
In millions, unless Dec. 31, Dec. 31, Dec. 31, Dec. 31,
otherwise stated 2008 2007 2008 2007
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Availability (%) 86.2 91.8 85.8 87.2
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Production (GWh) 12,656 13,440 48,891 50,395
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Revenue ($MM) $ 808 $ 783 $ 3,110 $ 2,775
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Gross margin ($MM)(1) $ 410 $ 435 $ 1,617 $ 1,544
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Operating income (loss)
($MM) (1) $ 127 $ 184 $ 533 $ 541
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Net earnings ($MM) $ 94 $ 130 $ 235 $ 309
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Comparable earnings
($MM) (1) $ 79 $ 103 $ 290 $ 264
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Basic and diluted
earnings per share $ 0.47 $ 0.64 $ 1.18 $ 1.53
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Comparable earnings per
share(1) $ 0.40 $ 0.51 $ 1.46 $ 1.31
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Cash flow from operations
($MM) $ 428 $ 192 $ 1,038 $ 847
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(1) Gross margin, operating income, and comparable earnings are not defined
under Canadian GAAP. Refer to the non-GAAP financial measures section
beginning on page 29 of the expanded news release for an explanation and
reconciliation.
A complete copy of TransAlta's fourth quarter and 2008 year-end expanded news release is available on the Investors section of our website: www.transalta.com.
TransAlta will hold a conference call and web cast at 9 a.m. MT (11 a.m. ET) today to discuss results. The call will begin with a short address by Steve Snyder, President and CEO, and Brian Burden, Executive Vice-President and CFO, followed by a question and answer period for investment analysts, investors, and other interested parties. A question and answer period for the media will immediately follow.
Please contact the conference operator five minutes prior to the call, noting "TransAlta Corporation" as the company and "Jennifer Pierce" as moderator.
Dial-in numbers: For local Calgary participants - (403)-269-4703 For local Toronto participants - (416)-883-7132 Toll-free North American participants - 1-888-205-4499 Participant pass code - 26326#
A link to the live web cast will be available via TransAlta's website, www.transalta.com, under Web Casts in the Investor Relations section. If you are unable to participate in the call, the instant replay is accessible at 1-877-245-4531 with TransAlta pass code 778513#. A transcript will be posted on TransAlta's website approximately one day after the conference call.
Note: If using a hands-free phone, lift the handset and press one to ask a question.
TransAlta is a power generation and wholesale marketing company focused on creating long-term shareholder value. We maintain a low-risk profile by operating a highly contracted portfolio of assets in Canada, the United States and Australia. Our focus is to efficiently operate our coal-fired, gas-fired, hydro and renewable facilities in order to provide our customers with a reliable, low-cost source of power. For nearly 100 years, we've been a responsible operator and a proud contributor to the communities where we work and live.
This news release may contain forward-looking statements, including statements regarding the business and anticipated financial performance of TransAlta Corporation. These statements are based on TransAlta Corporation's belief and assumptions based on information available at the time the assumption was made. These statements are subject to a number of risks and uncertainties that may cause actual results to differ materially from those contemplated by the forward-looking statements. Some of the factors that could cause such differences include legislative or regulatory developments, competition, global capital markets activity, changes in prevailing interest rates, currency exchange rates, inflation levels and general economic conditions in geographic areas where TransAlta Corporation operates.
Contacts: TransAlta Corporation - Media inquiries Michael Lawrence Manager, External Relations Phone: (403) 267-7330 Email: This email address is being protected from spambots. You need JavaScript enabled to view it. TransAlta Corporation - Investor inquiries Jennifer Pierce Vice President, Communications & Investor Relations Phone: (403) 267-7622 TransAlta Corporation - Investor inquiries Jess Nieukerk Manager, Investor Relations Phone: (403) 267-3607 Email: This email address is being protected from spambots. You need JavaScript enabled to view it. Website: www.transalta.com
SOURCE: TransAlta Corporation
mailto:This email address is being protected from spambots. You need JavaScript enabled to view it. mailto:This email address is being protected from spambots. You need JavaScript enabled to view it. http://www.transalta.com
