TransAlta Renewables Reports First Quarter 2021 Results and Closes Acquisition of 303 MW Asset Portfolio including 274 MW of Wind Capacity from TransAlta

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CALGARY, AB, May 12, 2021 /CNW/ -

First Quarter 2021 Highlights

  • Comparable EBITDA(1) of $123 million, a $5 million or four per cent improvement to the same period in 2020

  • Adjusted funds from operations ("AFFO")(1) of $93 million, in line with the same period last year

  • Cash available for distribution ("CAFD")(1) of $90 million or $0.34 per share in the first quarter, in line with the same period in 2020

Significant & Subsequent Events

  • The Company completed the previously announced acquisition of a 303 MW asset portfolio from TransAlta Corporation:

TransAlta Renewables Inc. ("TransAlta Renewables" or the "Company") (TSX: RNW) announced today financial results which were in line with expectations for the three months ended March 31, 2021.

"We had solid results this quarter and saw strong EBITDA contribution from our portfolio," said Todd Stack, President. "We are also pleased with the closing of our announced acquisition of the 303 MW asset portfolio including 274 MW of wind capacity. These assets are an important example of our renewable growth strategy in the US and Canada. The recent financing of our South Hedland asset ensures that we are well-funded and positioned to capitalize on future growth opportunities."

Comparable EBITDA for the three months ended March 31, 2021 increased by $5 million mainly due to the sale of 2020 environmental credits to TransAlta in the first quarter of 2021, the timing of legal fees and the strengthening of the Australian dollar relative to the Canadian dollar, partially offset by lower wind resources.

AFFO and CAFD for the three months ended March 31, 2021, were consistent to the same periods in 2020. The settlement of provisions relating to the transmission line loss proceeding, higher income tax expense and interest expense were partially offset by lower sustaining capital expenditures and foreign exchange impacts.

Net earnings attributable to common shareholders for the three months ended March 31, 2021, increased by $49 million compared to the same period in 2020, primarily due to higher finance income from investments in subsidiaries of TransAlta, foreign exchange gains resulting from the strengthening Australian dollar relative to the Canadian dollar and unrealized foreign exchange losses recognized in the prior period on the Preferred Shares Tracking the Amortizing Term Loan. The Preferred Shares Tracking the Amortizing Term Loan were redeemed on Oct. 23, 2020.

Global Pandemic

TransAlta Corporation ("TransAlta"), as the manager and operator of the Company's business and assets, continues to operate under its business continuity plan which focuses on ensuring that: (i) TransAlta employees who can work remotely do so and (ii) TransAlta employees who operate and maintain our facilities, and who are not able to work remotely, are able to work safely and in a manner that ensured they remained healthy. All of TransAlta's offices and sites follow strict health screening and physical distancing protocols with personal protective equipment readily available. Further, TransAlta maintains travel bans aligned to local jurisdictional guidance, enhanced cleaning procedures, revised work schedules, contingent work teams and the reorganization of processes and procedures to limit contact with other employees and contractors on-site.

All of our facilities, including those which we have economic interests through TransAlta, continue to remain fully operational and capable of meeting our customers' needs. The Company continues to work and serve all our customers and counterparties under the terms of their contracts. We have not experienced interruptions to service requirements. Electricity and steam supply continue to remain a critical service requirement to all our customers and have been deemed an essential service in our jurisdictions.

The Company remains highly diversified with facilities that are highly contracted and located in various geographies. Our cash flows have been relatively unaffected in the quarter due to the high contractedness of our asset portfolio and financial strength of our customers. The Company continues to maintain a strong financial position and currently has access to $1.0 billion in liquidity including $407 million of cash.

First Quarter Ended March 31, 2021 Highlights

C$ millions, unless otherwise stated

3 Months Ended


March 31, 2021

March 31, 2020

Renewable energy production (GWh)(2)

1,109

1,173

Revenues

126

110

Net earnings attributable to common shareholders

52

3

Comparable EBITDA(1)

123

118

Adjusted funds from operations

93

94

Cash flow from operating activities

103

82

Cash available for distribution

90

91

Net earnings per share attributable to common

shareholders, basic and diluted

0.19

0.01

Adjusted funds from operations per share(1)

0.35

0.35

Cash available for distribution per share(1)

0.34

0.34

Dividends declared per common share

0.23

0.23

Dividends paid per common share(3)

0.23

0.23

The following tables provide further detail on the allocation of the Comparable EBITDA between owned assets and assets in which TransAlta Renewables holds an economic interest; as well as a reconciliation to AFFO.

3 Months Ended March 31

(C$ millions)

2021

2020

Owned

Assets

Economic

Interest

Total

Owned

Assets

Economic

Interest

Total

Comparable EBITDA

73

50

123

67

51

118

Interest expense

(9)

(6)

(15)

(10)

(10)

Sustaining capital

expenditures

(1)

(1)

(2)

(3)

(5)

Current income tax expense

(1)

(4)

(5)

(1)

(1)

Tax equity distributions

(6)

(6)

(6)

(6)

Realized foreign exchange

loss

(3)

(3)

Provisions

(6)

(6)

Currency adjustment,

reserves, interest income

and other

2

1

3

2

(1)

1

AFFO

58

35

93

54

40

94

A complete copy of TransAlta Renewables' first quarter MD&A and unaudited financial statements are available through TransAlta Renewables' website at www.transaltarenewables.com or at SEDAR at www.sedar.com.

Notes

(1) Comparable EBITDA refers to earnings before interest, taxes, depreciation and amortization including finance lease income and adjusted for certain other items. AFFO includes the deduction of sustaining capital expenditures and distributions to non-controlling interests and excludes the effects of timing and working capital on distributions from subsidiaries of TransAlta in which the Company holds an economic interest. CAFD refers to adjusted funds from operations less principal repayments of amortizing debt. These items are not defined under International Financial Reporting Standards ("IFRS"). Presenting these items from period to period provides management and investors with the ability to evaluate earnings and cash flow trends more readily in comparison with prior periods' results and may not be comparable to similar measures presented by other issuers and should not be considered in isolation or as a substitute for measures prepared in accordance with IFRS. Refer to the Non-IFRS Measures and Reconciliation of Non-IFRS Measures sections of the MD&A for further discussion of these items, including, where applicable, reconciliations to measures calculated in accordance with IFRS.

(2) Includes production from Canadian Wind, Canadian Hydro and US Wind and Solar and excludes Canadian and Australian gas-fired generation. Production is not a key revenue driver for gas-fired facilities as most of their revenues are capacity-based.

(3) Includes DRIP payments in 2020. The DRIP was suspended in the fourth quarter of 2020.

About TransAlta Renewables Inc.

TransAlta Renewables is among the largest of any publicly traded renewable independent power producers ("IPP") in Canada. Our asset platform and economic interests are diversified in terms of geography, generation and counterparties and consist of interests in 24 wind facilities, 13 hydroelectric facilities, eight natural gas generation facilities, one solar facility, one natural gas pipeline, and one battery storage project, representing an ownership interest of 2,633 megawatts of owned generating capacity, located in the provinces of British Columbia, Alberta, Ontario, Québec, New Brunswick, the States of Pennsylvania, New Hampshire, Wyoming, Massachusetts, Michigan, Minnesota, Washington and the State of Western Australia. Our objectives are to (i) provide stable, consistent returns for investors through the ownership of, and investment in, highly contracted renewable and natural gas power generation and other infrastructure assets that provide stable cash flow primarily through long-term contracts with strong counterparties; (ii) pursue and capitalize on strategic growth opportunities in the renewable and natural gas power generation and other infrastructure sectors; (iii) maintain diversity in terms of geography, generation and counterparties; and (iv) pay out 80 to 85 per cent of cash available for distribution to the shareholders of the Company on an annual basis.

Cautionary Statement Regarding Forward-looking Information

This news release contains forward-looking statements, including statements regarding the business and anticipated financial performance of the Company that are based on the Company's current expectations, estimates, projections and assumptions in light of its experience and its perception of historical trends. In some cases, forward-looking statements can be identified by terminology such as "plans", "expects", "proposed", "will", "anticipates", "develop", "continue", and similar expressions suggesting future events or future performance. In particular, this news release contains forward-looking statements, pertaining to, without limitation, the following: the potential impact of COVID-19 on the Company, and the actions to be undertaken by the Company or TransAlta in response to the COVID-19 pandemic; the Company being positioned to capitalize on future growth opportunities; and the Company continuing to have access to liquidity. Forward-looking statements are subject to a number of significant risks, uncertainties and assumptions that could cause actual plans, performance, results or outcomes to differ materially from current expectations, including assumptions that the electricity and steam that is being provided by the Company will continue to be an essential service in the jurisdictions in which we operate. Factors that may adversely impact what is expressed or implied by forward-looking statements contained in this news release include risks relating to the impact of COVID-19, the impact of which will largely depend on the overall severity and duration of COVID-19, which cannot currently be predicted, and which present risks including, but not limited to: more restrictive directives of government and public health authorities; reduced labour availability impacting our ability to continue to staff the Company's operations and facilities; impacts on the Company's ability to realize its growth goals, including acquiring assets from TransAlta; decreases in short-term and/or long-term electricity demand; increased costs resulting from the Company's efforts to mitigate the impact of COVID-19; deterioration of worldwide credit and financial markets that could limit the Company's ability to obtain external financing to fund its operations and growth expenditures; a higher rate of losses on accounts receivables due to credit defaults; further disruptions to the Company's supply chain; impairments and/or write-downs of assets; and adverse impacts on the Company's information technology systems and the Company's internal control systems, including increased cybersecurity threats. Other factors that may adversely impact the Company's forward-looking statements include, but are not limited to, risks relating to: operational risks involving the Company's facilities, including unplanned outages at such facilities; disruptions in the transmission and distribution of electricity; the effects of weather and other climate-related risks; disruptions in the source of water, wind, solar or gas resources required to operate our facilities; natural disasters; equipment failure and our ability to carry out repairs in a cost-effective or timely manner; and industry risks and competition. The foregoing risk factors, among others, are described in further detail in the Company's Management's Discussion and Analysis and Annual Information Form for the year ended December 31, 2020, which are available on SEDAR at www.sedar.com. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect the Company's expectations only as of the date of this news release. The Company disclaims any intention or obligation to update or revise these forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Note: All financial figures are in Canadian dollars unless noted otherwise.

SOURCE TransAlta Renewables Inc.

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