Strong quarterly results driven by enhanced portfolio diversification
EDMONTON, Alberta, April 30, 2025 (GLOBE NEWSWIRE) -- Capital Power Corporation (TSX: CPX) today released financial results for the quarter ended March 31, 2025.
Highlights
Entered into a definitive agreement to acquire two natural gas-fired power generation facilities located in the PJM1 market for ~$3.0 billion (US $2.2 billion), adding ~2.2 GW of capacity to our U.S. flexible generation2 portfolio
Continued progressing five Ontario growth projects to add ~350 MW of long-term contracted capacity
Commenced construction of the Hornet Solar project in North Carolina
Generated adjusted funds from operations (AFFO) of $218 million and net cash flows from operating activities of $210 million
Generated adjusted EBITDA of $367 million and a net income of $150 million
“By adding the Hummel and Rolling Hills generating assets and expanding into PJM, we are driving long-term cash flow per share growth, superior diversification of our portfolio and enhanced our positioning for the future. Our existing assets continue to see strong generation driven by long-term fundamentals that underpin our strategy. This supports our thesis that natural gas-fired assets are critical to reliability, provide opportunity for growth and creation of shareholder value in various market conditions,” said Avik Dey, President and CEO of Capital Power.
“Our financial results and portfolio growth demonstrate the prudence of our strategy. We continue to grow our portfolio with a focus on geographic diversification, and pro-active risk management and maintenance of our investment grade credit rating. These efforts stabilize our cash flows through market cycles and, along with the dividend, continue to offer a compelling total return for our shareholders,” stated Sandra Haskins, SVP Finance and CFO of Capital Power.
1 Pennsylvania-New Jersey-Maryland Interconnection. 2 Flexible generation is defined as natural gas generation assets and energy storage business.
Operational and Financial Highlights1
($ millions, except per share amounts)
Three months ended March 31
2025
2024
Electricity generation (Gigawatt hours)
9,555
8,809
Generation facility availability
90
%
94
%
Revenues and other income
$
988
$
1,119
Adjusted EBITDA 2
$
367
$
279
Net income 3
$
150
$
205
Net income attributable to shareholders of the Company
$
151
$
205
Basic earnings per share
$
1.03
$
1.58
Diluted earnings per share
$
1.03
$
1.57
Net cash flows from operating activities
$
210
$
334
AFFO 2
$
218
$
142
AFFO per share 2
$
1.57
$
1.15
Purchase of property, plant and equipment and other assets, net
$
288
$
218
Dividends per common share, declared
$
0.6519
$
0.6150
1
The operational and financial highlights in this press release should be read in conjunction with the Management’s Discussion and Analysis and the audited condensed interim financial statements for the three months ended March 31, 2025.
2
Earnings before net finance expense, income tax expense, depreciation and amortization, impairments, foreign exchange gains or losses, finance expense and depreciation expense from joint venture interests, gains or losses on disposals and other transactions and unrealized changes in fair value of commodity derivatives and emissions credits and other items that are not reflective of the long-term performance of the Company’s underlying business (adjusted EBITDA) and AFFO are used as non-GAAP financial measures by the Company. The Company also uses AFFO per share which is a non-GAAP ratio. These measures and ratios do not have standardized meanings under GAAP and are, therefore, unlikely to be comparable to similar measures used by other enterprises. See Non-GAAP Financial Measures and Ratios.
3
Includes depreciation and amortization for the three months ended March 31, 2025 and 2024 of $126 million and $122 million, respectively. Forecasted depreciation and amortization for the remainder of 2025 is $129 million per quarter.
Subsequent Events
Acquisition of Hummel Station Intermediate Holdings III, LLC and Rolling Hills Generating Holdings, LLC
Consistent with the Company’s strategy to acquire flexible generation assets in the U.S, on April 14, 2025, Capital Power entered into a definitive agreement with Hummel Station Intermediate Holdings III, LLC and Rolling Hills Generating Holdings, LLC, each a subsidiary of LS Power Equity Advisors, LLC, to acquire 100% of the equity interests in:
1.
Hummel Station, LLC, which owns the 1,124 MW Hummel Station, a combined-cycle natural gas facility in Shamokin Dam, Pennsylvania (Hummel Acquisition), and
2.
Rolling Hills Generating, L.L.C., which owns the 1,023 MW Rolling Hills plant, a combustion turbine natural gas facility in Wilkesville, Ohio (Rolling Hills Acquisition and together with the Hummel Acquisition, the Acquisition).
The total purchase price of the Acquisition is expected to be approximately ~$3.0 billion (US$2.2 billion), subject to customary post-closing adjustments, including working capital and estimated transaction expenses. The Acquisition is expected to close in the third quarter of 2025, subject to regulatory approvals and other customary closing conditions.
Capital Power will finance the Acquisition using the net proceeds from its concurrent common share offering, outlined in further detail below, and a combination of some or all of the following (i) cash on hand from a prior equity issuance and asset divestitures; (ii) longer term debt financing; (iii) other immediately available funds, including potential draws under Capital Power’s existing credit facilities; and (iv) funding provided under Acquisition Term Loan Facilities, described in further detail below. This funding plan maintains Capital Power’s investment grade credit rating and preserves its strong balance sheet and financial flexibility.
Common share offering
On April 22, 2025, the Company completed a public offering of 11,902,500 common shares, which included 1,552,500 common shares issued pursuant to the full exercise of the over-allotment option, at $43.45 per common share (Offering Price) for total gross proceeds of approximately $517 million. The Company also issued 3,455,000 common shares at the Offering Price on a private placement basis, for gross proceeds of $150 million, subject to a statutory hold period of 4 months and one day from the closing date of the private placement.
Acquisition Term Loan Facilities
For purposes of financing the Acquisition, the Company entered into an agreement with a lender on April 14, 2025, whereby the lender has agreed to provide, on a fully underwritten basis, senior unsecured term loan facilities in the aggregate principal amount of up to $2 billion (Acquisition Term Loan Facilities). The Acquisition Term Loan Facilities are comprised of two tranches of $1 billion non-extendible, non-revolving, syndicated term credit facilities, with the first tranche maturing in 2028 and the second tranche maturing in 2027.
Analyst conference call and webcast
Capital Power will be hosting a conference call and live webcast with analysts on April 30, 2025 at 9:00 am (MT) to discuss the first quarter financial results. The webcast can be accessed at: https://edge.media-server.com/mmc/p/msjz5xzh/.
Conference call details will be sent directly to analysts.
An archive of the webcast will be available on the Company’s website at www.capitalpower.com following the conclusion of the analyst conference call.
Non-GAAP Financial Measures and Ratios
Capital Power uses (i) earnings before net finance expense, income tax expense, depreciation and amortization, impairments, foreign exchange gains or losses, finance expense and depreciation expense from our joint venture interests, gains or losses on disposals and other transactions and unrealized changes in fair value of commodity derivatives and emission credits (adjusted EBITDA), and (ii) AFFO as specified financial measures. Adjusted EBITDA and AFFO are both non-GAAP financial measures.
Capital Power also uses AFFO per share as a specified performance measure. This measure is a non-GAAP ratio determined by applying AFFO to the weighted average number of common shares used in the calculation of basic and diluted earnings per share.
These terms are not defined financial measures according to GAAP and do not have standardized meanings prescribed by GAAP and, therefore, are unlikely to be comparable to similar measures used by other enterprises. These measures should not be considered alternatives to net income, net income attributable to shareholders of Capital Power, net cash flows from operating activities or other measures of financial performance calculated in accordance with GAAP. Rather, these measures are provided to complement GAAP measures in the analysis of our results of operations from management’s perspective.
Adjusted EBITDA
Capital Power uses adjusted EBITDA to measure the operating performance of facilities and categories of facilities from period to period. Management believes that a measure of facility operating performance is more meaningful if results not related to facility operations are excluded from the adjusted EBITDA measure such as impairments, foreign exchange gains or losses, gains or losses on disposals and other transactions, unrealized changes in fair value of commodity derivatives and emission credits and other items that are not reflective of the long-term performance of the Company’s underlying business.
A reconciliation of adjusted EBITDA to net income is as follows:
($ millions)
Three months ended
Mar 2025
Dec 2024
Sep 2024
Jun 2024
Mar 2024
Dec 2023
Sep 2023
Jun 2023
Revenues and other income
988
853
1,030
774
1,119
984
1,150
881
Energy purchases and fuel, other raw materials and operating charges, staff costs and employee benefits expense, and other administrative expense
(628
)
(658
)
(612
)
(504
)
(677
)
(694
)
(626
)
(614
)
Remove unrealized changes in fair value of commodity derivatives and emission credits
(58
)
48
(78
)
(8
)
(200
)
(14
)
(151
)
23
Remove other non-recurring items 1
4
43
-
4
-
1
4
-
Adjusted EBITDA from joint ventures 2
61
44
61
57
37
36
37
37
Adjusted EBITDA
367
330
401
323
279
313
414
327
Depreciation and amortization
(126
)
(137
)
(124
)
(120
)
(122
)
(142
)
(148
)
(143
)
Unrealized changes in fair value of commodity derivatives and emission credits
58
(48
)
78
8
200
14
151
(23
)
Other non-recurring items
(4
)
(43
)
-
(4
)
-
(1
)
(4
)
-
Impairment
-
-
(27
)
-
-
-
-
-
Foreign exchange gains (losses)
2
(20
)
5
(4
)
(10
)
(2
)
(9
)
4
Net finance expense
(61
)
(61
)
(65
)
(53
)
(42
)
(49
)
(35
)
(34
)
Gain on divestiture
-
309
-
-
-
-
-
-
(Losses) gains on disposal and other transactions
(1
)
(11
)
(5
)
(17
)
2
(5
)
5
(3
)
Other items 2,3
(37
)
(32
)
(32
)
(34
)
(25
)
(22
)
(19
)
(19
)
Income tax expense
(48
)
(45
)
(53
)
(23
)
(77
)
(11
)
(83
)
(24
)
Net income
150
242
178
76
205
95
272
85
Net income attributable to:
Non-controlling interests
(1
)
2
(1
)
1
-
(2
)
(2
)
(2
)
Shareholders of the Company
151
240
179
75
205
97
274
87
Net income
150
242
178
76
205
95
272
85
1
For the three months ended March 31, 2025, other non-recurring items reflects costs related to the end-of-life of Genesee coal operations of $4 million.
For the three months ended December 31, 2024, other non-recurring items reflects restructuring costs of $39 million and costs related to the end-of-life of Genesee coal operations of $4 million.
2
Total income from joint ventures as per our consolidated statements of income.
3
Includes finance expense, depreciation expense and unrealized changes in fair value of derivative instruments from joint ventures.
AFFO and AFFO per share
AFFO and AFFO per share are measures of the Company’s ability to generate cash from its operating activities to fund growth capital expenditures, the repayment of debt and the payment of common share dividends.
AFFO represents net cash flows from operating activities adjusted to:
remove timing impacts of cash receipts and payments that may impact period-to-period comparability which include deductions for net finance expense and current income tax expense, the removal of deductions for interest paid and income taxes paid and removing changes in operating working capital,
include the Company’s share of the AFFO of its joint venture interests and exclude distributions received from the Company’s joint venture interests which are calculated after the effect of non-operating activity joint venture debt payments,
include cash from off-coal compensation received annually through to 2030,
remove the tax equity financing project investors’ shares of AFFO associated with assets under tax equity financing structures so only the Company’s share is reflected in the overall metric,
deduct sustaining capital expenditures and preferred share dividends,
exclude the impact of fair value changes in certain unsettled derivative financial instruments that are charged or credited to the Company’s bank margin account held with a specific exchange counterparty, and
exclude other typically non-recurring items affecting cash from operating activities that are not reflective of the long-term performance of the Company’s underlying business.
A reconciliation of net cash flows from operating activities to AFFO is as follows:
($ millions)
Three months ended March 31
2025
2024
Net cash flows from operating activities per condensed interim consolidated statements of cash flows
210
334
Add (deduct):
Interest paid
85
48
Change in fair value of derivatives reflected as cash settlement
(11
)
(12
)
Distributions received from joint ventures
(5
)
(8
)
Miscellaneous financing charges paid 1
(2
)
(7
)
Income taxes (recovered) paid
(2
)
15
Change in non-cash operating working capital
(25
)
(162
)
40
(126
)
Net finance expense 2
(53
)
(35
)
Current income tax recovery (expense)3
27
(16
)
Sustaining capital expenditures 4
(31
)
(25
)
Preferred share dividends paid
(7
)
(9
)
Remove tax equity interests’ respective shares of AFFO
(1
)
(1
)
AFFO from joint ventures
37
21
Other non-recurring items 5
(4
)
(1
)
AFFO
218
142
Weighted average number of common shares outstanding (millions)
139.2
123.7
AFFO per share ($)
1.57
1.15
1
Included in other cash items on the condensed interim consolidated statements of cash flows to reconcile net income to net cash flows from operating activities.
2
Excludes unrealized changes on interest rate derivative contracts, amortization, accretion charges and non-cash implicit interest on tax equity investment structures.
3
Excludes current income tax expense in related to the partial divestiture of Quality Wind and Port Dover and Nanticoke Wind as the amount is considered an investing activity.
4
Includes sustaining capital expenditures net of partner contributions of $4 million and $5 million for the three months ended March 31, 2025 and 2024, respectively.
5
For the three months ended March 31, 2025, non-recurring items reflect costs related to the end-of-life of Genesee coal operations of $5 million net of current income tax expenses of $9 million. For the three months ended March 31, 2024, non-recurring items reflect current income tax expenses of $1 million related to other non-recurring items recognized in prior periods.
Forward-looking Information
Forward-looking information or statements included in this press release are provided to inform the Company’s shareholders and potential investors about management’s assessment of Capital Power’s future plans and operations. This information may not be appropriate for other purposes. The forward-looking information in this press release is generally identified by words such as will, anticipate, believe, plan, intend, target, and expect or similar words that suggest future outcomes.
Material forward-looking information in this press release includes disclosures regarding (i) status of the Company’s 2025 AFFO and adjusted EBITDA guidance, (ii) forecasted 2025 depreciation, (iii) the timing of, funding of, generation capacity of, costs of technologies selected for, environmental benefits or commercial and partnership arrangements regarding existing, planned and potential development projects and acquisitions (including the Hummel and Rolling Hill Generating Stations acquisitions), transaction close timing and receipt of required regulatory approvals, and the satisfaction of other customary closing conditions and (iv) the financial impacts of the Hummel and Rolling Hill Generating Stations acquisitions.
These statements are based on certain assumptions and analyses made by the Company considering its experience and perception of historical trends, current conditions, expected future developments and other factors it believes are appropriate including its review of purchased businesses and assets. The material factors and assumptions used to develop these forward-looking statements relate to: (i) electricity, other energy and carbon prices, (ii) performance, (iii) business prospects (including potential re-contracting of facilities) and opportunities including expected growth and capital projects, (iv) status of and impact of policy, legislation and regulations and (v) effective tax rates.
Whether actual results, performance or achievements will conform to the Company’s expectations and predictions is subject to a number of known and unknown risks and uncertainties which could cause actual results and experience to differ materially from the Company’s expectations. Such material risks and uncertainties are: (i) changes in electricity, natural gas and carbon prices in markets in which the Company operates and the use of derivatives, (ii) regulatory and political environments including changes to environmental, climate, financial reporting, market structure and tax legislation, (iii) disruptions, or price volatility within our supply chains, (iv) generation facility availability, wind capacity factor and performance including maintenance expenditures, (v) ability to fund current and future capital and working capital needs, (vi) acquisitions and developments including timing and costs of regulatory approvals and construction, (vii) changes in the availability of fuel, (viii) ability to realize the anticipated benefits of acquisitions, (ix) limitations inherent in the Company’s review of acquired assets, (x) changes in general economic and competitive conditions and (xi) changes in the performance and cost of technologies and the development of new technologies, new energy efficient products, services and programs.
See Risks and Risk Management in the Company’s Integrated Annual Report for the year ended December 31, 2024, prepared as of February 25, 2025, for further discussion of these and other risks.
Readers are cautioned not to place undue reliance on any such forward-looking statements, which speak only as of the specified approval date. The Company does not undertake or accept any obligation or undertaking to release publicly any updates or revisions to any forward-looking statements to reflect any change in the Company’s expectations or any change in events, conditions or circumstances on which any such statement is based, except as required by law.
Territorial Acknowledgement
In the spirit of reconciliation, Capital Power respectfully acknowledges that we operate within the ancestral homelands, traditional and treaty territories of the Indigenous Peoples of Turtle Island, or North America. Capital Power’s head office is located within the traditional and contemporary home of many Indigenous Peoples of the Treaty 6 region and Métis Nation of Alberta Region 4. We acknowledge the diverse Indigenous communities that are located in these areas and whose presence continues to enrich the community.
About Capital Power
Capital Power is a growth-oriented power producer with approximately 10 GW of power generation at 30 facilities across North America. We prioritize safely delivering reliable and affordable power communities can depend on, building lower-carbon power systems, and creating balanced solutions for our energy future. We are Powering Change by Changing Power™.
