Pristine Power Inc. Announces First Quarter Financial Results
CALGARY, May 5 /CNW/ - Pristine Power Inc. (TSX: PPX) ("Pristine" or the "Company"), an independent Canadian developer and operator of electricity and steam generation facilities, today reported its financial results for the three-month period ended March 31, 2010.
"The first full quarter contribution from our EWCC facility led to record revenues reported in Q1/10," said Jeff Myers, President and CEO of Pristine. "Although our turbines at EWCC experienced unplanned outages during the quarter, our disciplined strategy of risk mitigation through our supplier contracts resulted in minor financial impact to the Company. Most of the costs associated with the outages will be covered by the equipment warranty, or by EWCC's insurance program," continued Mr. Myers. "We are pleased with the 10.8 MW FIT contract received in Ontario to date, and we are optimistic that the balance of our FIT submissions will receive favorable ranking from the OPA as part of the capacity allocation process for the high priority Bruce to Milton transmission line."
"At the end of the first quarter, formal hearings with the Ontario Municipal Board (OMB) regarding the York Energy Centre's (YEC) site plan application commenced. They were concluded on April 21, 2010," said Mr. Myers. "The OMB's decision is expected to be issued within approximately 90 days from the close of the proceedings. In the interim, we will continue to work closely with our contractors and suppliers to minimize the potential impacts on the project's schedule and economics, and we will focus our efforts on investigating various development opportunities in our core markets in Canada and the US pacific Northwest.
Financial Highlights
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Three Months ended March 31
(C$000's except per share & production
data) 2010 2009 % Change
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Net power produced(1)(MWh) 18,729 6,847 173.5%
Steam produced(1)(mmbtu) 90,713 - na
Revenue:
Power & steam revenues(1) 5,150 549 838.1%
Gas sales(1) 999 - na
Project management fees(1) 290 186 55.9%
Interest & other income(1) 201 148 35.8%
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Total Revenue 6,640 883 652.0%
Expense(1) 9,377 3,513 166.9%
Net loss & comprehensive loss (2,619) (2,541) 3.1%
Net loss per share (0.07) (0.08) (12.5%)
Funds used in operations(2) 1,352 2,153 (37.2%)
Cash & cash equivalents 7,067 4,193 68.5%
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(1) Before non-controlling interest share
(2) Funds used in operation is a non-GAAP measure
Highlights
- At the EnPower facilities, improved gas flows on the Spectra pipeline
and higher availability in the first quarter of 2010 (Q1/10) compared
to the same period in 2009 resulted in a 9.0% increase in power
produced from 6,847 MWh in Q1/09 to 7,464 MWh in Q1/10;
- Unplanned outages of turbines at the East Windsor Cogeneration Centre
(EWCC) resulted in lower than expected availability, but revenue was
not significantly impacted due to the capacity payment nature of the
contract with the Ontario Power Authority (OPA). Electricity
production totaled 11,265 MWH in the first quarter of 2010;
- On January 7, 2010, the Company issued 4,791,670 units at a price of
$2.40 per unit for gross proceeds of $11.5 million and closed a $5.0
million secured bridge loan facility;
Subsequent Event
- On April 8, 2010, the Grand Valley project entered into a contract
for 10.8 MW with the Ontario Power Authority under the Ontario Feed-
in-Tariff (FIT) program. The remaining 73 MW wind projects submitted
under FIT have advanced to the next stage of consideration. The
Company expects to own between 75% and 90% of the related projects.
Financial Summary
Revenue in Q1/10 increased 652.0% to $6.6 million from $0.9 million in
Q1/09. The increase is primarily attributable to:
i) power and steam sales contribution from EWCC which commenced
commercial operation on November 6, 2009;
ii) new revenue from the sale of unused gas at EWCC as electricity
production was lower than expected during the quarter, reflective
of the continuing impact from the economic downturn on energy
demand; and
iii) increased project management fees reflecting increased activity
related to the commercial operations of EWCC and activities
related to the development of YEC.
Total expenses in F2010 increased 166.9% to $9.4 million from $3.5 million in Q1/09. Of the $5.9 million increase, $5.2 million relates to the operations of EWCC with the remaining $0.7 million increase primarily attributable to higher general and administrative costs, including reduced capitalization of such expenses of approximately $0.3 million.
Development costs, which are a function of the number of bids submitted, the type of project, and the jurisdictional process, totaled $768 thousand in Q1/10 compared to $816 thousand in Q1/09. During the quarter, development activity continued on the Company's wind projects for the FIT process, its biomass projects in anticipation of the British Columbia BioEnergy Call Phase II, as well as prospective gas-fired generation projects in Ontario and western United States.
Net loss in Q1/10 of $2.6 million (or $0.07 per share, basic and diluted) was slightly higher than $2.5 million (or $0.08 per share, basic and diluted) in Q1/09. Higher revenue contribution in Q1/10 from a full quarter of operation at EWCC was offset by higher general and administrative expense, gas and plant operating costs, depreciation and amortization, and interest and finance charges compared to the same period in 2009.
Funds used in operations of $1.4 million in Q1/10 were 37.2% lower than $2.2 million in Q1/09. The decrease reflects contribution from the commencement of commercial operation of EWCC in November 2009. As the Company's projects become operational, the cash flow generated will partially cover the administrative costs and further project development activities.
Reconciliation of Funds Used in Operations
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For the three month period ended March 31
(C$000's) 2010 2009
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Funds used in operations 1,352 2,153
Change in operating working capital 1,211 (502)
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Cash used in operations 2,563 1,651
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Project Highlights
East Windsor Cogeneration Centre (EWCC) - 86 MW (gross) gas cogeneration
Unplanned outages of the facility's gas turbines during the quarter resulted in an availability factor of 65%. Due to the nature of the contract with the OPA and the decreased demand for electricity in the region, the Company still received the capacity payments despite having lower electricity production. Most of the direct costs associated with the outages are expected to be covered under warranty, or from EWCC's insurance
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For the three month period ended March 31 2010 2009
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Net production (MWh)(1) 11,265 -
Availability factor 65% -
Steam production (mmbtu)(1) 90,713 -
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(1) before non-controlling interest share
EnPower Green Energy Generation Limited Partnership - 10 MW (gross) waste heat
Improved gas flows on the Spectra pipeline T-South system resulted in a 9% increase in net production during Q1/10 compared to the same period in 2009. In addition, there were no unplanned outages at the facility in Q1/10 as had occurred in the same period last year. Consequently, the availability factor was 100% in Q1/10 compared to 86% in Q1/09.
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For the three month period ended March 31 2010 2009
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Net production (MWh)(1) 7,464 6,847
Combined capacity factor 72% 63%
Availability factor 100% 86%
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(1) before non-controlling interest share
York Energy Centre (YEC) - 393 MW (gross) gas turbine - advanced development
A formal hearing with the OMB regarding YEC's site plan application commenced on March 31, 2010 and concluded on April 21, 2010. The decision from the OMB is expected to be issued within approximately 90 days from the closing of the proceedings. A separate hearing to set aside the Interim Control Bylaw will commence before the OMB later in the second quarter, and a court action has also been filed in this regard. The Company is also investigating other alternative solutions, including appeals to the appropriate government authorities. In the interim, Pristine remains committed to the ultimate success of the project, and continues to work closely with its suppliers, contractors and other stakeholders to minimize potential impacts to the project schedule and economics.
Mackenzie Green Energy Centre (MGEC) - 65 MW (gross) biomass - contracted
The Mackenzie Green Energy Centre ("MGEC") is a proposed 65 MW (thermal equivalent) biomass fired project to be located in Mackenzie, British Columbia. BC Hydro has agreed to extend the removal of the performance security requirements until May 15, 2010. The Company plans to continue to seek further extensions as required. Such extensions have been successfully received in the past. If the security requirements are not replaced by the deadline or if the deadline is not further extended by BC Hydro, the power purchase agreement will terminate with no additional financial liabilities to Pristine. It has recently been announced that the pulp mill host site has been sold to Sinar Mas, a major pulp producer. Sinar Mas has announced its intention to re-start the pulp mill later in 2010.
Ontario Feed-in-Tariff (FIT) - up to 90 MW (gross) wind - submitted
Of the wind farm projects submitted into the Ontario FIT process, the Grand Valley project entered into a 10.8 MW contract for part of its project near Orangeville in April 2010. As per the news release dated April 8, 2010, the remaining 40 MW of the Grand Valley project and the 33 MW St. Columban project, which both require capacity on the Bruce-to-Milton transmission project line, will be subject to an economic connection test for assignment of this capacity. If the contracts are awarded, management expects construction to begin in late 2011 with commercial operations beginning in 2012. The Company expects to own between 75% and 90% of the projects.
Kleana - 600 MW (gross) run-of-river - submitted
As at March 31, 2010, Pristine's 600 MW run-of-river hydroelectric project in British Columbia that was submitted into the BC Clean Power Call remains one of eight projects still under consideration by BC Hydro. The Company holds an effective 57% interest in the project, of which 47% is subject to a voting trust agreement with the original owners of the shares. There can be no assurance that the project will receive a contract. If a contract is not awarded in the current Clean Power Call, the Company continues to believe in the long term potential of this project.
Balance Sheet
As at March 31, 2010, the Company had working capital of $29.3 million, including cash and cash equivalents of $7.1 million, compared to working capital of $22.8 million, including cash and cash equivalents of $4.2 million as at December 31, 2009. Long-term debt of the Company, including the current portion, was $98.7 million as at March 31, 2010, compared to $99.4 million as at December 31, 2009.
The Company expects $2.0 million of deposits outstanding at March 31, 2010 will be refunded in the second quarter of 2010 and will become available for general corporate purposes. In addition, upon financial close of the YEC, the Company expects to receive a return of funds for general corporate purposes of approximately $8 million to $12 million based on current expenditures to March 31, 2010, the terms of the Company's agreement with its partner and expected foreign exchange rates and interest rates. In the event that financing is delayed, the Company retains the right to require its partner to make its share of required equity contributions for up to 50% of project costs incurred to date, but would sacrifice a portion of its equity uplift in the project from its partner based upon a predefined formula.
On January 7, 2010, Pristine issued 4,791,670 units at a price of $2.40 per unit for gross proceeds of $11.5 million. Each unit consists of one common share and one half warrant. In addition, the Company closed a $5.0 million secured bridge loan facility. As additional consideration for the facility, 500,000 warrants were issued to the lenders. Each warrant entitles the holder to acquire one common share. Funds from both transactions will be used to develop projects already identified. As at March 31, 2010, there were 35,602,556 shares issued and outstanding.
Cautionary Statement Regarding Forward-Looking Information
Certain statements in this news release may constitute "forward-looking information" or "forward-looking statements" which involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of the Company or industry results to be materially different from any future results, performance or achievements expressed or implied by such forward-looking information. When used in this news release, such information uses such words as "estimates", "expects", "plans", "anticipates" and other similar terminology. This information reflects the Company's current expectations regarding future events, including the development, construction and operation of its development projects, including, but not limited to, the YEC, wind projects, Mackenzie Green Energy Centre and the Kleana run-of-river project and speaks only as of the date of this news release. Forward-looking information involves significant uncertainties, should not be read as a guarantee of future performance or results, and will not necessarily be an accurate indication of whether or not such results will be achieved. A number of factors could cause actual results to differ materially from the results discussed in the forward-looking information. Although the forward-looking information in this news release is based upon what management of the Company believes are reasonable assumptions, the Company cannot assure investors that actual results will be consistent with this forward-looking information. This forward-looking information is provided as of the date of this news release, and, subject to applicable securities laws, the Company assumes no obligation to update or revise such information to reflect new events or circumstances.
About Pristine
Pristine (TSX: PPX) is in the business of developing, owning and operating independent power plants that produce and sell electricity and in some cases, sell process steam to industrial users. Pristine capitalizes on opportunities in the independent power market by actively pursuing the development of dependable, cost-effective and environmentally responsible power generation facilities utilizing technology with proven past performance. Pristine pursues a mix of large gas-fired, bioenergy and hydroelectric projects, and smaller replicable waste heat recovery ERG(R) and bioenergy projects. Pristine currently has three projects in operation, and two under contract and in advanced development. Pristine is developing projects in strategic regions of North America. Visit www.pristinepower.ca for more information.
For further information: The Equicom Group Inc., Alice Dunning, Telephone: (416) 815-0700 x255, [email protected]
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