TransAlta announces strong second quarter results;TransAlta announces strong second quarter results; on-track to deliver annual objectives
-Comparable(i) earnings per share increased 25 per cent to $0.25 versus$0.20 in second quarter 2007; year-to-date comparable earnings up over50 per cent
- Gross margin(i) increased $20 million driven byexcellent energy trading results plus favorable pricing in Alberta andthe Pacific Northwest
- Successfully completed a US$500 million senior notes offering
- Announced 119 MW of additional capacity in Alberta
- Appointed former Sempra Chairman and CEO Stephen L. Baum to Board of Directors
CALGARY, ALBERTA, Jul 31, 2008 (Marketwire via COMTEX News Network) --
TransAltaCorporation (TransAlta) (TSX:TA) (NYSE:TAC) today reported comparableearnings for the second quarter 2008 of $49 million ($0.25 per share)versus $42 million ($0.20 per share) for the same period in 2007. Netearnings for the second quarter 2008 were $47 million ($0.24) comparedto $57 million ($0.28 per share) in the second quarter 2007.
Improvedcomparable quarterly results were driven by higher electricity pricingin Alberta and the Pacific Northwest as well as by an increase inenergy trading gross margins. These gains were partially offset bylower generation gross margins due to the planned outage at CentraliaThermal and by higher unplanned outages at Alberta Thermal.Year-over-year, net earnings were lower primarily due to the loweringof Canadian corporate tax rates and gains from Centralia asset sales inthe second quarter of 2007.
"TransAlta's second quarter resultsput us on-track to meet our annual objectives and deliver low doubledigit comparable earnings per share growth for the year," said SteveSnyder, President and CEO. "Excellent performance from our energytrading group and higher pricing in our core markets helped to offsetthe higher than normal outages at our Alberta Thermal units. With thecompletion of the boiler modification at our Centralia Thermal unit 2,our outlook for the remainder of the year remains strong."
Inthe quarter TransAlta successfully completed a US $500 million offeringof 6.65 per cent senior notes due in 2018. Proceeds from the issuanceare being used for debt repayment, financing of long-term investments,and general corporate purposes. TransAlta also announced its $75million, 53 MW Sundance 5 uprate and the $123 million, 66 MW expansionof its Summerview wind farm. Both projects will provide incrementalcapacity to the Alberta market in 2009 and 2010, respectively.Including these new projects, TransAlta currently has over 500 MW ofnew capacity under construction scheduled for completion between thefourth quarter of 2008 and 2011.
For the six months ended June30, 2008, comparable earnings increased 51 per cent to $148 million($0.74 per share) versus $98 million ($0.48 per share) in the firsthalf of 2007. Net earnings were $80 million ($0.41 per share) versus$113 million ($0.56 per share) in the first half of 2007. Year-to-datenet earnings are lower due to the after-tax equity loss of $65 millionrelated to the write-down of TransAlta's Mexico business.
Cashflow from operations for the three months ended June 30, 2008 was $171million compared to $168 million for the second quarter of 2007. Forthe six months ended June 30, 2008, cash flow from operations was $408million compared to $499 million in the same period of 2007. Cash flowyear-to-date was lower than the previous year due to highercontractually scheduled PPA revenues from 2006 being carried into thefirst quarter of 2007.
Fleet availability for the three monthsended June 30, 2008 decreased to 79.3 per cent compared to 83.6 percent in the same period last year primarily due to the planned outagesat Centralia Thermal and Genesee 3, and the higher than expectedunplanned outages at Alberta Thermal. Year-to-date fleet availabilityis in line with 2007.
Subsequent Events
On July 18,TransAlta received a non-binding letter from LS Power Equity Partnersand Global Infrastructure Partners regarding engaging in a dialogueabout a possible acquisition of TransAlta for $39 per share in cash.The Board of Directors issued a press release on July 21 concerning theletter in which it indicated TransAlta's special committee ofindependent directors will carefully consider the letter and willrespond in due course. That process is on-going. The Board is workingwith Greenhill & Co. and Goodmans LLP. Once the Board is in aposition to respond to the letter, it will do so through a pressrelease.
On July 23, TransAlta announced the appointment of Mr.Stephen L. Baum to its Board of Directors. Mr. Baum is the retiredChairman and CEO of Sempra Energy, a San Diego-based Fortune 500 energyservices holding company formerly known as Enova Corporation. Mr. Baumis a member of the Board of Directors of Computer Science Corporationand is Chairman of its Audit Committee. He also is a Senior Advisor toSkyFuel, Inc., a solar company. Mr. Baum is a graduate of HarvardUniversity and the University of Virginia Law School. He has alsoserved as a Captain in the U.S. Marine Corps. A full profile of Mr.Baum is available on TransAlta's website.
(i) Presentingcomparable earnings and gross margin from period to period is providedto help management and shareholders evaluate earnings trends morereadily in comparison with prior periods' results. An explanation andreconciliation of these non-GAAP financial measures can be foundbeginning on page 22 of the MD&A.
Second Quarter 2008 Highlights:
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3 months 3 months 6 months 6 months
ended ended ended ended
June 30, June 30, June 30, June 30,
In millions, unless otherwise stated 2008 2007 2008 2007
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Availability (%) 79.3 83.6 85.5 85.9
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Production (GWh) 10,652 11,497 23,878 24,194
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Revenue ($MM) 708 612 1,511 1,281
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Gross margin ($MM)(1) 376 356 809 734
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Operating income ($MM) (1) 93 91 282 229
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Net earnings ($MM) 47 57 80 113
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Comparable earnings ($MM) (1) 49 42 148 98
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Basic and diluted earnings per share ($) 0.24 0.28 0.41 0.56
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Comparable earnings per share ($) 0.25 0.20 0.74 0.48
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Cash flow from operations ($MM) 171 168 408 499
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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 22 of the MD&A.
Thecomplete second quarter report for 2008, including Management'sDiscussion and Analysis and unaudited financial statements, isavailable on the Investors section of our website: www.transalta.com.
TransAltawill hold a conference call and webcast at 9 a.m. Mountain (11 a.m.Eastern) today to discuss second quarter 2008 results. The call willbegin with a short address by Steve Snyder, President and CEO and BrianBurden, Executive Vice-President and CFO, followed by a question andanswer period for investment analysts, investors, and other interestedparties. A question and answer period for the media will immediatelyfollow.
Please contact the conference operator five minutesprior to the call, noting "TransAlta Corporation" as the company and"Jennifer Pierce" as moderator.
Dial-in numbers: For localCalgary participants - (403) 269-4703 For local Toronto participants -(416) 883-7132 Toll-free North American participants - 1-888-205-4499Participant pass code - 26326#
A link to the live webcast willbe available via TransAlta's website, www.transalta.com, under WebCasts in the Investor Relations section. If you are unable toparticipate in the call, the instant replay is accessible at1-877-245-4531 with TransAlta pass code 664306#. A transcript of thebroadcast will be posted on TransAlta's website once it becomesavailable.
Note: If using a hands-free phone, lift the handset and press one to ask a question.
TransAltais a power generation and wholesale marketing company focused oncreating long-term shareholder value. We maintain a low-risk profile byoperating a highly contracted portfolio of assets in Canada, the UnitedStates, Mexico and Australia. Our focus is to efficiently operate ourcoal-fired, gas-fired, hydro and renewable facilities in order toprovide our customers with a reliable, low-cost source of power. Fornearly 100 years, we've been a responsible operator and a proudcontributor to the communities where we work and live.
Thisnews release may contain forward-looking statements, includingstatements regarding the business and anticipated financial performanceof TransAlta Corporation. These statements are based on TransAltaCorporation's belief and assumptions based on information available atthe time the assumption was made. These statements are subject to anumber of risks and uncertainties that may cause actual results todiffer materially from those contemplated by the forward-lookingstatements. Some of the factors that could cause such differencesinclude legislative or regulatory developments, competition, globalcapital markets activity, changes in prevailing interest rates,currency exchange rates, inflation levels and general economicconditions in geographic areas where TransAlta Corporation operates.
Note: All financial figures are in Canadian dollars unless noted otherwise.
SOURCE: TransAlta Corporation
TransAlta Corporation - Media inquiries
Michael Lawrence
Senior Advisor, Media Relations
Phone: (403) 267-7330
Email: michael_lawrence@transalta.com
TransAlta Corporation - Investor inquiries
Jennifer Pierce
Vice President, Communications and Investor Relations
Phone: (403) 267-7622 or 1-800-387-3598 in Canada and U.S.
Email: investor_relations@transalta.com
TransAlta Corporation - Investor inquiries
Jess Nieukerk
Manager, Investor Relations
Phone: (403) 267-3607
Email: investor_relations@transalta.com
Website: www.transalta.com
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