Maxim Power earns $28.29-million in 2023 2024-03-14 19:58 ET - News Release
Mr. Bob Emmott reports
Maxim POWER CORP. REPORTS SUCCESSFUL OPERATIONS OF THE CCGT EXPANSION OF M2 WITH REVENUE OF $41-million AND NET INCOME OF $28-million IN 2023
Maxim Power Corp. has released its financial and operating results for the fourth quarter and year ended Dec. 31, 2023. The audited consolidated financial statements, accompanying notes and management's discussion and analysis (MD&A) will be available on SEDAR+ and on Maxim's website on March 14, 2024. All figures reported herein are Canadian dollars unless otherwise stated.
Operating results
During 2023, Maxim recorded net income and adjusted earnings before interest, taxes, depreciation and amortization (adjusted EBITDA) of $28.3-million and $50.7-million, respectively, as compared with net income of $42.3-million and adjusted EBITDA of $76.1-million, respectively, in the same period of 2022. Net income in 2023 decreased as compared with the same period in 2022 primarily due to the M2 unplanned outage from the non-injury fire which resulted in less generation from M2 in 2023 and net unrealized and realized commodity swap losses in 2023, partially offset by the property and business interruption claim in 2023. A significant portion of the decrease to adjusted EBITDA was also due to the M2 unplanned outage from the non-injury fire in part of 2023, partially offset by the business interruption claim.
M2 CCGT expansion commissioning
As previously reported, Maxim has successfully commissioned the combined cycle gas turbine (CCGT) expansion of M2. Construction of the heat recovery technology required to expand M2 into a CCGT facility commenced in 2021 and the project was originally expected to commission in the fourth quarter of 2022. Commissioning was delayed due to a non-injury fire on Sept. 30, 2022, which caused damage to M2's air inlet filter house. Repairs commenced shortly after and completed in August of 2023 to allow for the recommencement of commissioning activities. M2 began generating intermittent electricity to the grid on Aug. 14, 2023, and achieved CCGT commercial operations on Oct. 24, 2023.
The CCGT expansion of M2 increased the maximum generation capacity of the Milner site to 300 MW (megawatts) and has been designed to lower operations and maintenance costs per MWh (megawatt-hour). The CCGT expansion of M2 captures waste heat that would otherwise exhaust into the atmosphere and converts it into useful low-carbon dispatchable electricity for the Alberta power grid. The final project costs of the CCGT expansion of M2 are $162.1-million, excluding borrowing costs and the net effect of $20.0-million of grant proceeds.
This significant milestone completes the coal to gas energy transformation and repowering project at the Milner site which saw over $300-million of investment and successfully converted the legacy 150 MW coal-fired facility into a 300 MW CCGT facility. The CCGT expansion of M2 is expected to reduce the intensity of carbon emissions by more than 60 per cent compared with the legacy coal-fired Milner facility and more than 20 per cent compared with the simple cycle operations of M2.
Insurance information update
During the fourth quarter of 2023, Maxim settled its claim under the property insurance policy for $85.0-million, which represents substantially all of the costs incurred directly in relation to the damages to the air inlet filter house and related business interruption coverage allowable under the policy. Of the $85.0-million, $62.7-million relates to business interruption and $22.3-million relates to property damage. As of the date of this press release, $85.0-million has been paid by the insurance companies in relation to these claims. The final project costs to repair the air inlet filter house were $23.6-million.
As previously reported, Maxim submitted an additional insurance claim for a delay in start-up related to the non-injury fire incident under its course of construction insurance policy, which includes a provision for delay in start-up (DSU) coverage relating to the CCGT expansion of M2. The corporation has received a denial of coverage under this policy from the insurer and is currently evaluating its options in relation to this claim. No amounts have been recognized by the corporation in the financial statements in relation the DSU claim.
Normal course issuer bid update
Maxim's current normal course issuer bid (NCIB) program is for the Aug. 31, 2023, to Aug. 30, 2024, period. Under this NCIB, the corporation may purchase for cancellation up to 2,526,477 common shares of the corporation. Collectively under this program and as of the date of this press release, the corporation has repurchased and cancelled 112,264 common shares for $500,000 at a weighted average price of $4.45 per share. Maxim's NCIB program is limited to $2.0-million for the 2024 calendar year under the senior credit facility. Any excess is subject to approval from the lenders under the senior credit facility.
Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization)
Adjusted EBITDA is provided to assist management and investors in determining the corporation's approximate operating cash flow before interest, income taxes, and depreciation and amortization, and certain other non-recurring income and expenses.
About Maxim Power Corp.
Based in Calgary, Alta., Maxim is one of Canada's largest truly independent power producers. Maxim is now focused entirely on power projects in Alberta. Its core asset the 300 MW H.R. Milner plant, M2, in Grande Cache, Alta., is a state-of-the-art combined cycle gas-fired power plant that commissioned in Q4, 2023. Maxim continues to explore additional development options in Alberta including its currently permitted gas-fired generation project and the permitting of its wind power generation project. Maxim trades on the TSX (Toronto Stock Exchange) under the symbol MXG.