TransAlta Reports Second Quarter 2023 Results and Raises 2023 Financial Guidance
- None.
- None.
Second Quarter 2023 Financial Highlights
- Adjusted EBITDA(1) of
, an increase of 39 per cent over the same period in 2022$387 million - Free Cash Flow ("FCF")(1) of
, or$278 million per share, an increase of 94 per cent on a per-share basis from the same period in 2022$1.05 - Earnings before income taxes of
, an improvement of$79 million from the same period in 2022$101 million - Net earnings attributable to common shareholders of
, an increase of$62 million from the same period in 2022$142 million - Cash flow from operating activities of
, an increase of$11 million from the same period in 2022$140 million
Other Business Highlights
- Entered into a definitive arrangement agreement with TransAlta Renewables to acquire all of the outstanding common shares of TransAlta Renewables subject to the approval of TransAlta Renewables shareholders
- Entered into an automatic share purchase plan ("ASPP") to facilitate repurchases of common shares through the normal course issuer bid during blackout period. The Company returned
of capital to common shareholders in the first and second quarter of 2023 through buybacks of 6.1 million common shares$71 million - Kent Hills rehabilitation program on track with 27 turbines fully reassembled. Turbines are being returned to service as commissioning activities are completed and, to date, 10 turbines have been fully placed back in operation. 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 achieve commercial operations in the second half of 2023
- Construction at the Horizon Hill wind project in
Oklahoma is advancing well with all major equipment now delivered to site. Turbine erection activities are underway with 27 of the 34 wind turbines fully assembled. Construction of the transmission interconnection is also underway. Based on the schedule to complete the transmission line, we have updated our schedule to reflect commercial operations in the first half of 2024 - Equipment deliveries at White Rock East and West projects are well advanced with the final blade sets due to arrive in August. Tower assembly has commenced as well as the construction of the transmission interconnection
- Acquired a 50 per cent interest in the 320 MW Tent Mountain early-stage pumped hydro development project
2023 Revised Outlook
- Increased 2023 annual financial guidance as set out below:
- Adjusted EBITDA range of
to$1.7 billion , an increase of 17 per cent at the midpoint of prior guidance$1.8 billion - FCF range of
to$850 million , an increase of 29 per cent at the midpoint of prior guidance$950 million
TransAlta Corporation ("TransAlta" or the "Company") (TSX: TA) (NYSE: TAC) today reported its financial results for the three and six months ended June 30, 2023.
"Our second quarter results continue to demonstrate the value of our strategically diversified fleet, which benefited from our strong asset optimization and hedging activities. With our performance across the fleet and our continuing positive expectations for the balance of year, we have revised our 2023 full year financial guidance upwards for both adjusted EBITDA and free cash flow, with revised midpoints exceeding the top end of our original targets to reflect stronger market conditions and solid operational performance," said John Kousinioris, President and Chief Executive Officer of TransAlta.
"We continue to advance our growth plan and are progressing several opportunities, with 418 MW of projects in an advanced stage of development and set to reach final investment decisions. The cash flows from our legacy fleet are positioning us well to realize our Clean Electricity Growth Plan."
"As we continue the execution of our Clean Electricity Growth Plan, I am pleased that we have reached an agreement with TransAlta Renewables for the acquisition of the common shares of TransAlta Renewables not already owned by TransAlta. It is clear that the strategies of both TransAlta and TransAlta Renewables have converged and we are excited to bring these two companies back together. The combined company's greater scale and enhanced positioning will drive value for all of our shareholders," added Mr. Kousinioris.
Key Business Developments
TransAlta Corporation to Acquire TransAlta Renewables Inc. to Simplify Structure and Enhance Strategic Position
On July 10, 2023, the Company and TransAlta Renewables entered into a definitive arrangement agreement (the "Arrangement Agreement") under which the Company will acquire all of the outstanding common shares of TransAlta Renewables not already owned, directly or indirectly, by TransAlta 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
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)
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
The TransAlta Renewables Board (with abstentions by TransAlta-nominated directors) unanimously determined that the Agreement is in the best interests of TransAlta Renewables and is fair to its shareholders, approved the execution and delivery of the Agreement and unanimously recommends that TransAlta Renewables shareholders vote in favour of the Agreement.
A special meeting for TransAlta Renewables shareholders to consider the transaction 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.
Normal Course Issuer Bid
On May 26, 2023, the TSX accepted the notice filed by the Company to implement a normal course issuer bid ("NCIB") for a portion of its common shares. Pursuant to the NCIB, TransAlta may repurchase up to a maximum of 14,000,000 common shares, representing approximately 7.29 per cent of its public float of common shares as at May 17, 2023. Purchases under the NCIB may be made through open market transactions on the TSX and any alternative Canadian trading platforms on which the common shares are traded, based on the prevailing market price. Any common shares purchased under the NCIB will be cancelled. The period during which TransAlta is authorized to make purchases under the NCIB commenced on May 31, 2023 and ends on May 30, 2024, or such earlier date on which the maximum number of common shares are purchased under the NCIB or the NCIB is terminated at the Company's election.
The NCIB provides the Company with a capital allocation alternative with a view to ensuring long-term shareholder value. TransAlta's Board of Directors and management believe that, from time to time, the market price of the common shares might not be reflective of the underlying value and purchases of common shares for cancellation under the NCIB may provide an opportunity to enhance shareholder value.
Tent Mountain Pumped Hydro Development Project
On April 24, 2023, the Company acquired a 50 per cent interest in the Tent Mountain Renewable Energy Complex ("Tent Mountain"), an early-stage 320 MW pumped hydro energy storage development project, located in southwest
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 | |
Adjusted availability (%) | 84.6 | 87.3 | 88.2 | 88.2 |
Production (GWh) | 4,596 | 4,461 | 10,568 | 9,820 |
Revenues | 625 | 458 | 1,714 | 1,193 |
Adjusted EBITDA(1) | 387 | 279 | 890 | 538 |
FFO(1) | 391 | 220 | 765 | 399 |
FCF(1) | 278 | 145 | 541 | 253 |
Earnings (loss) before income taxes | 79 | (22) | 462 | 220 |
Net earnings (loss) attributable to common | 62 | (80) | 356 | 106 |
Cash flow from (used in) operating activities | 11 | (129) | 473 | 322 |
Net earnings (loss) per share attributable to | 0.23 | (0.30) | 1.34 | 0.39 |
FFO per share(1),(2) | 1.48 | 0.81 | 2.88 | 1.47 |
FCF per share(1),(2) | 1.05 | 0.54 | 2.03 | 0.93 |
Second Quarter Financial Results Summary
Adjusted EBITDA(1) for the three and six months ended June 30, 2023, increased by
FCF(1) for the three and six months ended June 30, 2023, totaled
Net earnings (loss) attributable to common shareholders for the three and six months ended June 30, 2023, were
Cash flow from operating activities for the three and six months ended June 30, 2023, increased by
Alberta Electricity Portfolio
For the three and six months ended June 30, 2023, the
Gross margin for the three and six months ended June 30, 2023, was
For the three and six months ended June 30, 2023, the realized merchant power price per MWh of production increased by
For the three and six months ended June 30, 2023, the fuel and purchased power cost per MWh of production decreased by
For the three and six months ended June 30, 2023, carbon compliance costs per MWh of production increased by
Hedged volumes for the three and six months ended June 30, 2023 were 1,667 GWh and 3,713 GWh at an average price of
Increased 2023 Financial Guidance
The Company increased its 2023 outlook for adjusted EBITDA to between
FCF outlook has also been increased and is now expected to be between
The following table provides additional details pertaining to the 2023 outlook:
Measure | Updated Target 2023 | Original Target 2023 | 2022 Actuals |
Adjusted EBITDA(1) | |||
FCF(1) |
Range of key 2023 power and gas price assumptions:
Market | Updated 2023 Assumptions | 2023 Original Assumptions |
Alberta Spot ($/MWh) | ||
Mid-C Spot (US$/MWh) | ||
AECO Gas Price ($/GJ) |
Range of
Range of hedging assumptions | Q3 2023 | Q4 2023 | Full year 2024 | Full year 2025 |
Hedged production (GWh) | 2,012 | 1,558 | 4,506 | 2,423 |
Hedge price ($/MWh) | ||||
Hedged gas volumes (GJ) | 18 million | 15 million | 44 million | 22 million |
Hedge gas prices ($/GJ) |
Liquidity and Financial Position
The Company continues to maintain a strong financial position in part due to long-term contracts and hedged positions. As at June 30, 2023, TransAlta had access to
Normal Course Issuer Bid
During the three and six months ended June 30, 2023, the Company purchased and cancelled a total of 6,112,900 common shares, including those purchased under the ASPP, at an average price of
Segmented Financial Performance
($ millions) | Three Months Ended | Six Months Ended | ||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |
Hydro | 147 | 88 | 253 | 149 |
Wind and Solar | 50 | 88 | 138 | 177 |
Gas | 166 | 65 | 406 | 170 |
Energy Transition | 13 | 11 | 67 | 16 |
Energy Marketing | 43 | 50 | 82 | 67 |
Corporate | (32) | (23) | (56) | (41) |
Adjusted EBITDA(1) | 387 | 279 | 890 | 538 |
Earnings (loss) before income taxes | 79 | (22) | 462 | 220 |
Hydro:
- Adjusted EBITDA(1) for the three and six months ended June 30, 2023, increased by
and$59 million $104 million , respectively, compared to the same periods in 2022, primarily due to higher realized energy and ancillary service prices in theAlberta market and higher production. The three months ended June 30, 2023, further benefited from higher energy production, partially offset by lower revenues from lower ancillary service volumes. The six months ended June 30, 2023, benefited from higher sales of environmental attributes and the Company captured revenue through forward hedging for theAlberta hydro assets and realized gains from the hedging strategy. OM&A in both periods increased primarily due to higher insurance costs, salary escalations and incentive accruals, and higher legal fees.
Wind and Solar:
- Adjusted EBITDA(1) for the three and six months ended June 30, 2023, decreased by
and$38 million , respectively, compared to the same periods in 2022, primarily due to lower production due to lower wind resource, lower environmental attribute revenue, lower realized merchant prices in$39 million Alberta in the second quarter, and lower liquidated damages recognized at the Windrise wind facility. During the six months ended June 30, 2023, lower adjusted EBITDA was partially offset by higher realized merchant prices inAlberta . OM&A in both periods increased due to salary escalations, higher insurance costs and long-term service agreement escalations.
Gas:
- Adjusted EBITDA(1) for the three and six months ended June 30, 2023, increased by
and$101 million , respectively, compared to the same periods in 2022, mainly due to higher realized energy prices for our$236 million Alberta gas merchant assets, net of hedging, and lower natural gas prices, partially offset by higher carbon compliance costs and higher OM&A from higher contract labour related to planned major maintenance inAustralia . The six months ended June 30, 2023, benefited from higher production due to stronger market conditions inAlberta partially offset by higher carbon costs and fuel usage related to production.
Energy Transition:
- Adjusted EBITDA(1) increased by
and$2 million , respectively, for the three and six months ended June 30, 2023, compared to the same periods in 2022, primarily due to higher merchant pricing and higher production, partially offset by higher fuel usage. During the six months ended June 30, 2023, adjusted EBITDA was negatively impacted by higher purchased power costs required to fulfill contractual obligations during planned outages. OM&A decreased due to the retirement of Sundance Unit 4 in the first quarter of 2022.$51 million
Energy Marketing:
- Adjusted EBITDA(1) for the three and six months ended June 30, 2023, , decreased by
and increased by$7 million , respectively, compared to the same periods in 2022. Year-to-date results exceeded segment expectations from short-term trading of both physical and financial power and gas products across all North American deregulated markets. The Company was able to capitalize on short-term volatility in the trading markets while maintaining the overall risk profile of the business unit.$15 million
Corporate:
- Adjusted EBITDA(1) for the three and six months ended June 30, 2023, decreased by
and$9 million , respectively, compared to the same periods in 2022, primarily due to higher incentive accruals reflecting the Company's performance, increased spending to support strategic and growth initiatives and increased costs due to inflationary pressures.$15 million
Conference call
TransAlta will hold a conference call and webcast at 9:00 a.m. MST (11:00 a.m. EST) today, August 4, 2023, to discuss our second quarter 2023 results. The call will begin with a short address by John Kousinioris, President and Chief Executive Officer, and Todd Stack, EVP Finance and Chief Financial Officer, followed by a question and answer period for investment analysts and investors. A question and answer period for the media will immediately follow.
Dial-in number - Second Quarter 2023 Conference Call
Toll-free North American participants call: 1-888-664-6392
A link to the live webcast will be available on the Investor Centre section of TransAlta's website at https://transalta.com/investors/presentations-and-events/. If you are unable to participate in the call, the instant replay is accessible at 1-888-390-0541 (
Notes
(1) | These items are not defined and have no standardized meaning under IFRS. Presenting these items from period to period provides management and investors with the ability to evaluate earnings (loss) trends more readily in comparison with prior periods' results. Please refer to the Non-IFRS Measures section of this earnings release for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS. |
(2) | Funds from operations per share and free cash flow per share are calculated using the weighted average number of common shares outstanding during the period. The weighted average number of common shares outstanding for June 30, 2023, was 266 million shares (June 30, 2022 – 271 million). Please refer to the Non-IFRS Measures section in this earnings release for the purpose of these non-IFRS ratios. |
Non-IFRS financial measures and other specified financial measures
We use a number of financial measures to evaluate our performance and the performance of our business segments, including measures and ratios that are presented on a non-IFRS basis, as described below. Unless otherwise indicated, all amounts are in Canadian dollars and have been derived from our audited annual 2022 consolidated financial statements and the unaudited interim condensed consolidated statements of earnings (loss) for the three and six months ended June 30, 2023, prepared in accordance with IFRS. We believe that these non-IFRS amounts, measures and ratios, read together with our IFRS amounts, provide readers with a better understanding of how management assesses results.
Non-IFRS amounts, measures and ratios do not have standardized meanings under IFRS. They are unlikely to be comparable to similar measures presented by other companies and should not be viewed in isolation from, as an alternative to, or more meaningful than, our IFRS results.
Adjusted EBITDA
Each business segment assumes responsibility for its operating results measured by adjusted EBITDA. Adjusted EBITDA is an important metric for management that represents our core business profitability. Interest, taxes, depreciation and amortization are not included, as differences in accounting treatments may distort our core business results. In addition, certain reclassifications and adjustments are made to better assess results, excluding those items that may not be reflective of ongoing business performance. This presentation may facilitate the readers' analysis of trends.
Funds From Operations ("FFO")
FFO is an important metric as it provides a proxy for cash generated from operating activities before changes in working capital and provides the ability to evaluate cash flow trends in comparison with results from prior periods. FFO is a non-IFRS measure.
Free Cash Flow ("FCF")
FCF is an important metric as it represents the amount of cash that is available to invest in growth initiatives, make scheduled principal repayments on debt, repay maturing debt, pay common share dividends or repurchase common shares. Changes in working capital are excluded so FFO and FCF are not distorted by changes that we consider temporary in nature, reflecting, among other things, the impact of seasonal factors and timing of receipts and payments. FCF is a non-IFRS measure.
Non-IFRS Ratios
FFO per share, FCF per share and adjusted net debt to adjusted EBITDA are non-IFRS ratios that are presented in the MD&A. Refer to the Reconciliation of Cash Flow from Operations to FFO and FCF and Key Non-IFRS Financial Ratios sections of the MD&A for additional information.
FFO per share and FCF per share
FFO per share and FCF per share are calculated using the weighted average number of common shares outstanding during the period. FFO per share and FCF per share are non-IFRS ratios.
Reconciliation of these non-IFRS financial measures to the most comparable IFRS measure are provided below.
Reconciliation of Non-IFRS Measures on a Consolidated Basis
The following table reflects adjusted EBITDA by segment and provides reconciliation to earnings before income taxes for the three months ended June 30, 2023:
Three months ended June 30, 2023 $ millions | Hydro | Wind & | Gas | Energy | Energy Marketing | Corporate | Total | Equity | Reclass | IFRS |
Revenues | 168 | 86 | 251 | 121 | 3 | 1 | 630 | (5) | — | 625 |
Reclassifications and adjustments: | ||||||||||
Unrealized mark-to-market (gain) loss | (1) | (8) | 56 | (3) | 93 | — | 137 | — | (137) | — |
Realized loss on closed exchange positions | — | — | (4) | — | (48) | — | (52) | — | 52 | — |
Decrease in finance lease receivable | — | — | 13 | — | — | — | 13 | — | (13) | — |
Finance lease income | — | — | 4 | — | — | — | 4 | — | (4) | — |
Unrealized foreign exchange loss on commodity | — | — | — | — | 1 | — | 1 | — | (1) | — |
Adjusted revenues | 167 | 78 | 320 | 118 | 49 | 1 | 733 | (5) | (103) | 625 |
Fuel and purchased power | 5 | 7 | 85 | 90 | — | 1 | 188 | — | — | 188 |
Reclassifications and adjustments: | ||||||||||
Australian interest income | — | — | (1) | — | — | — | (1) | — | 1 | — |
Adjusted fuel and purchased power | 5 | 7 | 84 | 90 | — | 1 | 187 | — | 1 | 188 |
— | — | 25 | — | — | — | 25 | — | — | 25 | |
Gross margin | 162 | 71 | 211 | 28 | 49 | — | 521 | (5) | (104) | 412 |
OM&A | 14 | 18 | 50 | 14 | 6 | 32 | 134 | — | — | 134 |
Taxes, other than income taxes | 1 | 4 | 4 | 1 | — | — | 10 | (1) | — | 9 |
Net other operating income | — | (1) | (9) | — | — | — | (10) | — | — | (10) |
Adjusted EBITDA(2) | 147 | 50 | 166 | 13 | 43 | (32) | 387 | |||
Equity income | (1) | |||||||||
Finance lease income | 4 | |||||||||
Depreciation and amortization | (173) | |||||||||
Asset impairment reversals | 13 | |||||||||
Net interest expense | (56) | |||||||||
Foreign exchange loss | 8 | |||||||||
Gain on sale of assets and other | 5 | |||||||||
Earnings before income taxes | 79 |
(1) | The |
(2) | Adjusted EBITDA is not defined and has no standardized meaning under IFRS. Refer to the Non-IFRS financial measures and other specified financial measures section in this earnings release. |
The following table reflects adjusted EBITDA by segment and provides reconciliation to loss before income taxes for the three months ended June 30, 2022:
Three months ended June 30, 2022 $ millions | Hydro | Wind & | Gas | Energy | Energy Marketing | Corporate | Total | Equity | Reclass | IFRS |
Revenues | 105 | 96 | 127 | 96 | 36 | 1 | 461 | (3) | — | 458 |
Reclassifications and adjustments: | ||||||||||
Unrealized mark-to-market (gain) loss | — | 15 | 128 | — | (56) | — | 87 | — | (87) | — |
Realized gain (loss) on closed exchange positions | — | — | (10) | — | 75 | — | 65 | — | (65) | — |
Decrease in finance lease receivable | — | — | 11 | — | — | — | 11 | — | (11) | — |
Finance lease income | — | — | 6 | — | — | — | 6 | — | (6) | — |
Unrealized foreign exchange loss on commodity | — | — | — | — | 2 | — | 2 | — | (2) | — |
Adjusted revenues | 105 | 111 | 262 | 96 | 57 | 1 | 632 | (3) | (171) | 458 |
Fuel and purchased power | 6 | 6 | 147 | 71 | — | 1 | 231 | — | — | 231 |
Reclassifications and adjustments: | ||||||||||
Australian interest income | — | — | (1) | — | — | — | (1) | — | 1 | — |
Adjusted fuel and purchased power | 6 | 6 | 146 | 71 | — | 1 | 230 | — | 1 | 231 |
— | 1 | 12 | (4) | — | — | 9 | — | — | 9 | |
Gross margin | 99 | 104 | 104 | 29 | 57 | — | 393 | (3) | (172) | 218 |
OM&A | 10 | 15 | 45 | 17 | 7 | 23 | 117 | — | — | 117 |
Taxes, other than income taxes | 1 | 4 | 4 | 1 | — | — | 10 | (1) | — | 9 |
Net other operating income | — | (10) | (10) | — | — | — | (20) | — | — | (20) |
Reclassifications and adjustments: | ||||||||||
Insurance recovery | — | 7 | — | — | — | — | 7 | — | (7) | — |
Adjusted net other operating income | — | (3) | (10) | — | — | — | (13) | — | (7) | (20) |
Adjusted EBITDA(2) | 88 | 88 | 65 | 11 | 50 | (23) | 279 | |||
Equity income | 2 | |||||||||
Finance lease income | 6 | |||||||||
Depreciation and amortization | (115) | |||||||||
Asset impairment reversals | 24 | |||||||||
Net interest expense | (62) | |||||||||
Foreign exchange gain | 9 | |||||||||
Gain on sale of assets and other | 2 | |||||||||
Loss before income taxes | (22) |
(1) | The |
(2) | Adjusted EBITDA is not defined and has no standardized meaning under IFRS. Refer to the Non-IFRS financial measures and other specified financial measures section in this earnings release. |
The following table reflects adjusted EBITDA by segment and provides reconciliation to earnings before income taxes for the six months ended June 30, 2023:
Six months ended June 30, 2023 $ millions | Hydro | Wind & | Gas | Energy | Energy Marketing | Corporate | Total | Equity | Reclass | IFRS |
Revenues | 293 | 201 | 746 | 388 | 95 | 1 | 1,724 | (10) | — | 1,714 |
Reclassifications and adjustments: | ||||||||||
Unrealized mark-to-market (gain) | (2) | (8) | (8) | (17) | 109 | — | 74 | — | (74) | — |
Realized loss on closed exchange | — | — | (17) | — | (103) | — | (120) | — | 120 | — |
Decrease in finance lease receivable | — | — | 26 | — | — | — | 26 | — | (26) | — |
Finance lease income | — | — | 8 | — | — | — | 8 | — | (8) | — |
Unrealized foreign exchange loss on commodity | — | — | — | — | 1 | — | 1 | — | (1) | — |
Adjusted revenues | 291 | 193 | 755 | 371 | 102 | 1 | 1,713 | (10) | 11 | 1,714 |
Fuel and purchased power | 10 | 16 | 215 | 271 | — | 1 | 513 | — | — | 513 |
Reclassifications and adjustments: | ||||||||||
Australian interest income | — | — | (2) | — | — | — | (2) | — | 2 | — |
Adjusted fuel and purchased power | 10 | 16 | 213 | 271 | — | 1 | 511 | — | 2 | 513 |
— | — | 57 | — | — | — | 57 | — | — | 57 | |
Gross margin | 281 | 177 | 485 | 100 | 102 | — | 1,145 | (10) | 9 | 1,144 |
OM&A | 26 | 35 | 91 | 31 | 20 | 56 | 259 | (1) | — | 258 |
Taxes, other than income taxes | 2 | 7 | 8 | 2 | — | — | 19 | (1) | — | 18 |
Net other operating income | — | (3) | (20) | — | — | — | (23) | — | — | (23) |
Adjusted EBITDA(2) | 253 | 138 | 406 | 67 | 82 | (56) | 890 | |||
Equity income | 1 | |||||||||
Finance lease income | 8 | |||||||||
Depreciation and amortization | (349) | |||||||||
Asset impairment reversals | 16 | |||||||||
Net interest expense | (115) | |||||||||
Foreign exchange loss | 5 | |||||||||
Gain on sale of assets and other | 5 | |||||||||
Earnings before income taxes | 462 |
(1) | The |
(2) | Adjusted EBITDA is not defined and has no standardized meaning under IFRS. Refer to the Non-IFRS financial measures and other specified financial measures section in this earnings release. |
The following table reflects adjusted EBITDA by segment and provides reconciliation to earnings before income taxes for the six months ended June 30, 2022:
Six months ended June 30, 2022 | Hydro | Wind & | Gas | Energy | Energy Marketing | Corporate | Total | Equity | Reclass | IFRS |
Revenues | 182 | 191 | 561 | 202 | 62 | 2 | 1,200 | (7) | — | 1,193 |
Reclassifications and adjustments: | ||||||||||
Unrealized mark-to-market (gain) | — | 28 | (34) | 11 | (46) | — | (41) | — | 41 | — |
Realized gain (loss) on closed | — | — | (7) | — | 65 | — | 58 | — | (58) | — |
Decrease in finance lease receivable | — | — | 22 | — | — | — | 22 | — | (22) | — |
Finance lease income | — | — | 11 | — | — | — | 11 | — | (11) | — |
Adjusted revenues | 182 | 219 | 553 | 213 | 81 | 2 | 1,250 | (7) | (50) | 1,193 |
Fuel and purchased power | 10 | 14 | 278 | 165 | — | 2 | 469 | — | — | 469 |
Reclassifications and adjustments: | ||||||||||
Australian interest income | — | — | (2) | — | — | — | (2) | — | 2 | — |
Adjusted fuel and purchased power | 10 | 14 | 276 | 165 | — | 2 | 467 | — | 2 | 469 |
— | 1 | 30 | (3) | — | — | 28 | — | — | 28 | |
Gross margin | 172 | 204 | 247 | 51 | 81 | — | 755 | (7) | (52) | 696 |
OM&A | 21 | 31 | 89 | 33 | 14 | 41 | 229 | — | — | 229 |
Taxes, other than income taxes | 2 | 6 | 8 | 2 | — | — | 18 | (1) | — | 17 |
Net other operating income | — | (17) | (20) | — | — | — | (37) | — | — | (37) |
Reclassifications and adjustments: | ||||||||||
Insurance recovery | — | 7 | — | — | — | — | 7 | — | (7) | — |
Adjusted net other operating income | — | (10) | (20) | — | — | — | (30) | — | (7) | (37) |
Adjusted EBITDA(2) | 149 | 177 | 170 | 16 | 67 | (41) | 538 | |||
Equity income | 4 | |||||||||
Finance lease income | 11 | |||||||||
Depreciation and amortization | (232) | |||||||||
Asset impairment reversals | 66 | |||||||||
Net interest expense | (129) | |||||||||
Foreign exchange gain | 11 | |||||||||
Gain on sale of assets and other | 2 | |||||||||
Earnings before income taxes | 220 |
(1) | The |
(2) | Adjusted EBITDA is not defined and has no standardized meaning under IFRS. Refer to the Non-IFRS financial measures and other specified financial measures in this earnings release. |
Reconciliation of Cash flow from operations to FFO and FCF
The table below reconciles our cash flow from operating activities to our FFO and FCF:
Three Months Ended | Six Months Ended | |||
$ millions unless otherwise stated | June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 |
Cash flow from (used in) operating | 11 | (129) | 473 | 322 |
Change in non-cash operating working | 408 | 260 | 366 | (24) |
Cash flow from operations before | 419 | 131 | 839 | 298 |
Adjustments | ||||
Share of adjusted FFO from joint | 5 | 2 | 8 | 5 |
Decrease in finance lease receivable | 13 | 11 | 26 | 22 |
Clean energy transition provisions and | 7 | 8 | 7 | 8 |
Realized gain (loss) on closed positions | (52) | 65 | (120) | 58 |
Other(3) | (1) | 3 | 5 | 8 |
FFO(4) | 391 | 220 | 765 | 399 |
Deduct: | ||||
Sustaining capital(1) | (44) | (31) | (64) | (48) |
Productivity capital | (1) | (1) | (1) | (2) |
Dividends paid on preferred shares | (12) | (10) | (25) | (20) |
Distributions paid to subsidiaries' non- | (53) | (30) | (129) | (72) |
Principal payments on lease liabilities | (3) | (3) | (5) | (4) |
FCF(4) | 278 | 145 | 541 | 253 |
Weighted average number of common | 264 | 271 | 266 | 271 |
FFO per share(4) | 1.48 | 0.81 | 2.88 | 1.47 |
FCF per share(4) | 1.05 | 0.54 | 2.03 | 0.93 |
(1) | Includes our share of amounts for |
(2) | Includes amounts related to onerous contracts recognized in 2021. |
(3) | Other consists of production tax credits, which is a reduction to tax equity debt, less distributions from equity accounted joint venture. |
(4) | These items are not defined and have no standardized meaning under IFRS. Refer to the Non-IFRS Measures section in this earnings release. |
The table below provides a reconciliation of our adjusted EBITDA to our FFO and FCF:
Three Months Ended | Six Months Ended | |||
June 30, 2023 | June 30, 2022 | June 30, 2023 | June 30, 2022 | |
Adjusted EBITDA(1)(4) | 387 | 279 | 890 | 538 |
Provisions | 1 | — | 4 | 10 |
Interest expense | (38) | (50) | (83) | (104) |
Current income tax recovery | 42 | (13) | (18) | (25) |
Realized foreign exchange gain | 1 | 13 | (6) | 15 |
Decommissioning and restoration | (9) | (7) | (16) | (14) |
Other non-cash items | 7 | (2) | (6) | (21) |
FFO(3)(4) | 391 | 220 | 765 | 399 |
Deduct: | ||||
Sustaining capital(4) | (44) | (31) | (64) | (48) |
Productivity capital | (1) | (1) | (1) | (2) |
Dividends paid on preferred | (12) | (10) | (25) | (20) |
Distributions paid to subsidiaries' | (53) | (30) | (129) | (72) |
Principal payments on lease | (3) | (3) | (5) | (4) |
FCF(3) | 278 | 145 | 541 | 253 |
(1) | Adjusted EBITDA is defined in the Non-IFRS financial measures and other specified financial measures section in this earnings release and reconciled to earnings (loss) before income taxes above. |
(2) | The Company incurred lower current tax expense for 2023, due to the Company completing an internal reorganization during the second quarter of 2023, which allowed the Company to apply tax attributes, previously unavailable due to Canadian tax limitations, against taxable income in |
(3) | These items are not defined and have no standardized meaning under IFRS. FFO and FCF are defined in the Non-IFRS financial measures and other specified financial measures section of in this earnings release and reconciled to cash flow from operating activities above. |
(4) | Includes our share of amounts for |
TransAlta is in the process of filing its unaudited interim Consolidated Financial Statements and accompanying notes, as well as the associated Management's Discussion & Analysis ("MD&A"). These documents will be available today on the Investors section of TransAlta's website at www.transalta.com or through SEDAR at www.sedarplus.ca.
About TransAlta Corporation:
TransAlta owns, operates and develops a diverse fleet of electrical power generation assets in
For more information about TransAlta, visit our web site at transalta.com.
Cautionary Statement Regarding Forward-Looking Information
This news release contains "forward-looking information", within the meaning of applicable Canadian securities laws, and "forward-looking statements", within the meaning of applicable
The forward-looking statements contained in this news release are based on many assumptions including, but not limited to, the following material assumptions: no significant changes to applicable laws and regulations beyond those that have already been announced; merchant power prices in
Note: All financial figures are in Canadian dollars unless otherwise indicated.
View original content:https://www.prnewswire.com/news-releases/transalta-reports-second-quarter-2023-results-and-raises-2023-financial-guidance-301893492.html
SOURCE TransAlta Corporation
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