News Release

Capstone Infrastructure Corporation Announces Strong Fourth Quarter and Fiscal 2014 Results

TORONTO, ONTARIO--(Marketwired - March 4, 2015) - Capstone Infrastructure Corporation (TSX:CSE)(TSX:CSE.DB.A)(TSX:CSE.PR.A)(TSX:CPW.DB) -

Fourth quarter and Fiscal 2014 Highlights:

  • Revenue in the fourth quarter grew by 5.8%, Adjusted EBITDA rose by 23.8% and AFFO increased 36.6%
  • Annual revenue grew by 13.4%, Adjusted EBITDA rose by 24.9% and AFFO increased by 41.3%,
  • Quarterly and annual results were driven by expanded power production, greater contribution from Bristol Water and lower expenses
  • Commissioned the Skyway 8 wind facility, completed Saint-Philémon and started construction on Goulais
  • Secured a new 20-year contract for Cardinal Power
  • Bristol Water invested $121 million in capital expenditures, but received a disappointing regulatory outcome, which is proceeding to review and arbitration

Capstone Infrastructure Corporation (the "Corporation") today reported audited results for the fiscal year and fourth quarter ended December 31, 2014. The Corporation's 2014 Annual Report to Shareholders, including Management's Discussion and Analysis and audited consolidated financial statements, is available at and on SEDAR at All amounts are in Canadian dollars.

"In 2014, we exceeded our forecast and achieved Adjusted EBITDA of $160.4 million. This strong result reflects a full year of contributions from the wind assets we acquired in 2013, increased revenues and higher margin from Bristol Water, improved results, including higher power rates at Cardinal, and the absence of acquisition due diligence costs," said Michael Bernstein, President and Chief Executive Officer of Capstone. "We invested $162 million in growth capital expenditures in our power assets, including making significant progress on the construction of new wind power facilities. In addition, Bristol Water invested $121 million in system reliability and expansion. The future of Cardinal has been assured with a 20-year non-utility generator agreement with Ontario's Independent Electricity System Operator, and our diversified portfolio of assets is performing well. This provides a solid footing for Capstone's priorities in 2015, which include evaluating potential acquisitions, continuing the build-out of our development pipeline, and working through a review of Bristol Water's next five-year business plan with the goal of securing an improved result."

Financial Review

In millions of Canadian dollars or on a per share basis unless otherwise noted Quarter ended Dec 31 Variance
Year ended Dec 31 Variance
2014 2013 2014 2013
Revenue 116.7 110.3 5.8% 441.6 389.5 13.4%
Expenses 55.1 60.2 (8.4)% 226.5 220.4 2.7%
Net income (1.2) 16.0 (107.2)% 33.5 67.2 (50.1)%
Adjusted EBITDA1 47.0 38.0 23.8% 160.4 128.4 24.9%
AFFO1, 2 19.0 13.9 36.6% 56.4 39.9 41.3%
AFFO per share1, 2 0.196 0.145 35.1% 0.584 0.493 18.6%
Dividends per share 0.075 0.075 -% 0.300 0.300 -%
Payout ratio1 38% 52% (26.2)% 51% 61% (15.7)%
1"Adjusted EBITDA", "Adjusted Funds from Operations", "Adjusted Funds from Operations per Share" and "Payout Ratio" are non-GAAP financial measures and do not have any standardized meaning prescribed by International Financial Reporting Standards ("IFRS"). As a result, these measures may not be comparable to similar measures presented by other issuers. Definitions of each measure are provided on page 25 of Management's Discussion and Analysis with reconciliation to IFRS measures provided on page 26.
2Consolidated AFFO includes dividends received from businesses with non-controlling interest, which is more reflective of the cash flow available to Capstone from their operating activities.

Fiscal 2014 Highlights

Consolidated revenue for the year increased by 13.4%, or $52.1 million, attributable to a scheduled increase in regulated tariffs, favourable foreign currency appreciation and higher consumption at Bristol Water. Capstone's power generation segment also delivered higher revenues from the additional assets acquired in 2013 and bringing into service the new Skyway 8 wind farm. Revenue increases were partially offset by lower revenue and production at Cardinal, and reduced Alberta Power Pool prices affecting revenue from Whitecourt.

Total expenses increased by 2.7%, or $6.1 million, reflecting foreign exchange effects at Bristol Water, as well as the larger power portfolio. Administrative expenses rose because of integration costs and higher staff numbers, while development costs were lower because the acquisition expenses incurred in 2013 were absent in 2014.

Adjusted EBITDA was 24.9%, or $31.9 million higher in 2014, representing increased contributions in power generation from wind assets and Cardinal. Bristol Water's contribution was higher due to beneficial foreign exchange, a regulated annual rate increase and growing consumption. Värmevärden also contributed additional dividends in 2014. Adjusted Funds from Operations (AFFO) increased by 41.3%, or $16.5 million, as a result of positive contributions from the power segment, Bristol Water and Värmevärden, which were partially offset by higher interest and taxes paid.

Fourth Quarter Financial Highlights

During the fourth quarter of 2014, the Corporation's revenue increased by 5.8%, or $6.4 million, over the same period in 2013, primarily due to foreign exchange effects and higher regulated rates at Bristol Water, and higher production at the wind and hydro power facilities. These gains were partially offset by lower production at Cardinal and Amherstburg, and lower power pool prices in Alberta, which also affected output at Whitecourt. Total expenses decreased by 8.4%, or $5.1 million, related to lower operating and administrative expenses and the absence of acquisition costs incurred the previous year; these reductions were offset by higher operating expenses at Bristol Water due to foreign currency appreciation. Adjusted EBITDA in the quarter increased by 23.8%, or $9.0 million, reflecting the factors noted above, as well as lower operating expenses at Cardinal. Fourth quarter AFFO increased by 36.6%, or $5.1 million, related to Cardinal operating expenses and the absence of acquisition costs.

Financial Performance Highlights by Segment

Power Infrastructure:

In millions of Canadian dollars unless otherwise noted Quarter ended Dec 31 Variance
Year ended Dec 31 Variance
2014 2013 2014 2013
Power generated (GWh) 457.5 581.9 (21.4)% 1,773.0 2,002.3 (11.5)%
Revenue 55.2 57.0 (3.3)% 203.3 193.9 4.8%
Adjusted EBITDA 30.8 28.6 7.8% 106.7 89.1 19.7%
AFFO 20.1 20.2 (0.6)% 66.2 53.4 23.9%

Fiscal 2014 power segment revenue increased by 4.8%, or $9.4 million, due to a full-year contribution from wind facilities acquired in 2013, a partial contribution from Skyway 8, and higher production at Amherstburg and Erie Shores. These gains were offset by decreased production from Cardinal and the hydro facilities, and lower power pool prices at Whitecourt.

Adjusted EBITDA increased by 19.7%, or $17.6 million, reflecting the larger wind portfolio and lower operating expenses at Cardinal. These gains were offset by lower revenue at Whitecourt and the hydro facilities, and increased costs to develop near-term wind projects. AFFO increased by 23.9%, or $12.8 million, reflecting higher Adjusted EBITDA, and partially offset by higher interest, principal payments and maintenance capital expenditures for operating facilities acquired in 2013.



In millions of Canadian dollars unless otherwise noted Quarter ended Dec 31 Variance
Year ended Dec 31 Variance
2014 2013 2014 2013
Water supplied (megalitres) 20,333 20,372 (0.2)% 82,528 82,125 0.5%
Revenue 61.5 53.3 15.5% 238.3 195.6 21.8%
Adjusted EBITDA before non-controlling interest 30.5 26.5 15.1% 118.9 95.8 24.1%
Adjusted EBITDA 15.3 13.2 15.2% 59.4 47.9 24.1%
AFFO1 1.8 1.8 4.0% 8.1 6.5 23.3%
1Bristol Water's contribution to Capstone's AFFO consists of dividends and does not reflect the amount of cash generated by the business.

Bristol Water revenue increased by 21.8%, or $42.7 million, of which $25.2 million was attributable to foreign currency exchange rates, with the remainder related to an increase in water tariffs and higher water consumption. Bristol Water's Adjusted EBITDA contribution to the Corporation's results increased by 24.1%, or $11.5 million, primarily reflecting the factors cited above. Adjusted EBITDA before non-controlling interests increased by 24.1%, or $23.1 million, reflecting revenue growth partially offset by increased operating expenses. Capstone's AFFO from Bristol Water increased by 23.3%, or $1.5 million.

Bristol Water's capital expenditures were approximately $121 million during 2014, and cumulative capital expenditures for AMP5 stood at $526 million. The Corporation expects Bristol Water's cumulative capital expenditures over AMP5 to comply with the regulator-approved amount by the end of the regulatory period, on March 31, 2015.

District Heating

In millions of Canadian dollars unless otherwise noted Quarter ended Dec 31 Variance
Year ended Dec 31 Variance
2014 2013 2014 2013
Heat production (GWh) 312 323 (3.4)% 1,010 1,091 (7.4)%
Interest income 0.7 0.7 (5.2)% 2.9 2.9 1.3%
Adjusted EBITDA and AFFO1 2.2 0.7 201.0% 7.4 6.0 24.6%
1Värmevärden's contribution to Capstone's Adjusted EBITDA and AFFO consists of interest income and dividends and does not reflect the amount of cash generated by the business.

In 2014, Värmevärden paid $2.9 million of interest income to the Corporation, in line with 2013. Värmevärden paid $4.5 million in dividends to the Corporation, compared with $3.1 million the year before, because of an additional dividend paid in the fourth quarter of 2014 that was not paid in the previous year. Cumulatively, Värmevärden's contribution to the Corporation's Adjusted EBITDA and AFFO during 2014 was $7.4 million, compared with $6.0 million the year before.

Financial Position

As at December 31, 2014, the Corporation had unrestricted cash and cash equivalents of $58.8 million including $33.1 million from the power segment and $13.3 million from Bristol Water, with the balance at the corporate level. Bristol Water also has $126.5 million of credit available to support its capital investment program. The Corporation has $27.4 million in total cash and cash equivalents available for general corporate purposes. As at December 31, 2014, the Corporation's debt-to-capitalization ratio rose to 71.2% on a fair value basis. This increase is related to the lower share price as well as a higher debt fair value as a result of declining interest rates.

Additional developments

On January 16, 2015, Hydro Quebec Distribution declared that the new Saint-Philémon wind facility had achieved commercial operations. This facility consists of eight turbines, with total capacity of 24 megawatts. The Corporation holds a 51% interest in Saint-Philémon; as a result, the start of commercial operations adds 12 megawatts to the Corporation's net installed capacity.

On February 5, 2015, the Board of Directors of Bristol Water resolved to formally reject the final price determination for 2015 to 2020 set by the Water Services Regulation Authority (Ofwat), the water industry regulator in England and Wales. The price determination in question governs the pricing model and business plan that would apply to Bristol Water for a five-year period, commencing April 1, 2015.

The matter will proceed to review by the Competition and Markets Authority (CMA), the UK agency responsible for considering regulatory references and appeals. It is expected that the CMA will render its final determination on the matter in the third quarter of 2015. Any adjustments arising from the CMA's decision would come into effect on April 1, 2016.


The Corporation expects a higher contribution from its growing portfolio of wind power generation businesses, a lower contribution from Cardinal and a return to normal dividends from its district heating utility. Bristol Water will operate under the final determination issued by Ofwat, the economic regulator for water utilities in the UK, after the first quarter of 2015. Adjusted EBITDA in 2015 is anticipated to be between $115 million to $125 million.

The assumptions underlying the Corporation's 2015 outlook include, but are not limited to:

  • Cardinal operates as a dispatchable facility under its 20-year contract with Ontario's Independent Electricity System Operator;
  • That existing water rates at Bristol Water will remain in place for the first quarter, until the AMP6 final determination takes effect on April 1, 2015, reducing rates by 14% (real) for the remainder of the year;
  • Full year of contributions from the newly completed Skyway 8 Wind Farm;
  • Contribution from Saint-Philémon, which achieved commercial operations in January 2015, and Goulais, which is expected to reach commercial operations in the second quarter of 2015;
  • Whitecourt generates $3 million in Adjusted EBITDA based on projected Alberta power pool prices and successfully working with stakeholders;
  • That the Swedish krona to Canadian dollar and British pound to Canadian dollar exchange rates remain consistent with recent rates.

The Corporation's strategic priorities for 2015 include:

Completing the CMA review at Bristol Water

The Corporation will work with Bristol Water during the Competition and Markets Authority (CMA) review of the regulatory decision rendered on December 12, 2014. Management anticipates the review process will be successful in achieving an improved outcome for the pricing model and business plan that applies to Bristol Water for the AMP6 period, spanning April 1, 2015 to March 31, 2020.

Advancing its pipeline of development projects

The Corporation is focused on advancing its near-term wind power projects on time and on budget. Goulais is expected to achieve commercial operations in April of 2015, while Renewable Energy Approval (REA) has been secured for two new projects, with construction on one of them slated to begin by the end of 2015. We expect to receive REAs for the other three Ontario projects by the end of the second quarter of 2015.

Maximizing the performance of its existing businesses

The Corporation is focused on further enhancing the operational performance of its businesses, which includes predictive maintenance, detailed planning for capital expenditures that boost value, and finding new ways to increase cash flow such as the use of turbine pitch optimization technology at Erie Shores in 2014.

Pursuing organic growth initiatives

In addition to the CMA review, Bristol Water will complete its capital expenditure program for the current regulatory period, which concludes in March 2015. This program will drive growth in Bristol Water's regulated capital value, which supports growing revenue and cash flow over time.

Pursuing new investment opportunities

The Corporation's strategy is to develop, acquire and manage a portfolio of high quality power, utilities and transportation infrastructure businesses and public-private partnerships. Geographically, the Corporation is focusing its business development efforts primarily on North America, the United Kingdom, and Western and Northern Europe, with Australia and New Zealand as additional markets of interest.

Dividend Declarations

The Board of Directors today declared a quarterly dividend of $0.075 per common share for the quarter ending March 31, 2015 on the Corporation's outstanding common shares. The dividend will be payable on April 30, 2015 to shareholders of record at the close of business on March 31, 2015.

The Board of Directors also declared a dividend on its Cumulative Five-Year Rate Reset Preferred Shares, Series A (the "Preferred Shares") of $0.3125 per Preferred Share to be paid on or about April 30, 2015 to shareholders of record at the close of business on April 14, 2015. The dividend on the Preferred Shares covers the period from February 1, 2015 to April 30, 2015.

In respect of the Corporation's April 30, 2015 common share dividend payment, the Corporation will issue common shares in connection with the reinvestment of dividends to shareholders enrolled in the Corporation's Dividend Reinvestment Plan. The price of common shares purchased with reinvested dividends will be the previous five-day volume weighted average trading share price on the Toronto Stock Exchange, less a 5% discount.

The dividends paid by the Corporation on its common shares and the Preferred Shares are designated "eligible" dividends for the purposes of the Income Tax Act (Canada). An enhanced dividend tax credit applies to eligible dividends paid to Canadian residents.

A distribution of $0.075 per unit will also be paid on April 30, 2015 to holders of record on March 31, 2015 of Class B Exchangeable Units of MPT LTC Holdings LP, a subsidiary of the Corporation.

Dividend Reinvestment Plan

Learn more about the Corporation's Dividend Reinvestment Plan ("DRIP") at

Fiscal 2014 Results Conference Call and Webcast

The Corporation will hold a conference call on Thursday, March 5, 2015 at 8:30 a.m. ET to discuss the Corporation's financial and operating performance for the fourth quarter and year ended December 31, 2014.

The call will be hosted by Michael Bernstein, President and Chief Executive Officer, and Michael Smerdon, Executive Vice President and Chief Financial Officer.

  • To listen to the call from Canada or the United States, dial 1-800-319-4610. If calling from elsewhere, dial +1-604-638-5340. A replay of the call will be available until March 26, 2015.
  • For the replay, from Canada or the United States, dial 1-800-319-6413 and enter the code 1385#. From elsewhere, dial +1-604-638-9010 and enter the code 1385#.
  • The event will be webcast live with an accompanying slide presentation on the Corporation's website at

About Capstone Infrastructure Corporation

Capstone's mission is to provide investors with an attractive total return from responsibly managed long-term investments in core infrastructure in Canada and internationally. The company's strategy is to develop, acquire and manage a portfolio of high quality utilities, power and transportation businesses, and public-private partnerships that operate in a regulated or contractually-defined environment and generate stable cash flow. Capstone currently has investments in utilities businesses in Europe and owns, operates and develops thermal and renewable power generation facilities in Canada with a total installed capacity of net 461 megawatts. Please visit for more information.

1See Notice to Readers.
2Reflects Capstone's economic interest in its various power facilities.

Notice to Readers

Certain of the statements contained within this document are forward-looking and reflect management's expectations regarding the future growth, results of operations, performance and business of Capstone Infrastructure Corporation (the "Corporation") based on information currently available to the Corporation. Forward-looking statements and financial outlook are provided for the purpose of presenting information about management's current expectations and plans relating to the future and readers are cautioned that such statements may not be appropriate for other purposes. These statements and financial outlook use forward-looking words, such as "anticipate", "continue", "could", "expect", "may", "will", "intend", "estimate", "plan", "believe" or other similar words. These statements and financial outlook are subject to known and unknown risks and uncertainties that may cause actual results or events to differ materially from those expressed or implied by such statements and financial outlook and, accordingly, should not be read as guarantees of future performance or results. The forward-looking statements and financial outlook within this document are based on information currently available and what the Corporation currently believes are reasonable assumptions, including the material assumptions set out in the management's discussion and analysis of the results of operations and the financial condition of the Corporation ("MD&A") for the year ended December 31, 2014 under the heading "Results of Operations", as updated in subsequently filed MD&A of the Corporation (such documents are available under the Corporation's SEDAR profile at

Other potential material factors or assumptions that were applied in formulating the forward-looking statements and financial outlook contained herein include or relate to the following: that the business and economic conditions affecting the Corporation's operations will continue substantially in their current state, including, with respect to industry conditions, general levels of economic activity, regulations, weather, taxes and interest rates; that there will be no material delays in the Corporation's wind development projects achieving commercial operation; that the Corporation's power infrastructure facilities will experience normal wind, hydrological and solar irradiation conditions, and ambient temperature and humidity levels; that there will be no material changes to the Corporation's facilities, equipment or contractual arrangements; that there will be no material changes in the legislative, regulatory and operating framework for the Corporation's businesses; that there will be no material delays in obtaining required approvals and no material changes in rate orders or rate structures for the Corporation's power infrastructure facilities, or Värmevärden; that Bristol Water will implement rates prescribed in Ofwat's final determination while pursuing a more appropriate outcome through the Competition & Markets Authority; that there will be no material changes in environmental regulations for the power infrastructure facilities, Värmevärden or Bristol Water; that there will be no significant event occurring outside the ordinary course of the Corporation's businesses; the refinancing on similar terms of the Corporation's and its subsidiaries' various outstanding credit facilities and debt instruments which mature during the period in which the forward-looking statements and financial outlook relate; market prices for electricity in Ontario and the amount of hours Cardinal is dispatched; the price Whitecourt is able to capture for its electricity production considering the market price for electricity in Alberta, the impact of renewable energy credits, and Whitecourt's agreement with Millar Western, which includes sharing mechanisms regarding the price received for electricity sold by Whitecourt; the re-contracting of the PPA for the Sechelt hydro power generating station; that there will be no material change to the accounting treatment for Bristol Water's business under International Financial Reporting Standards, particularly with respect to accounting for maintenance capital expenditures; that there will be no material change from the expected amount and timing of capital expenditures by Bristol Water; that there will be no material changes to the Swedish Krona to Canadian dollar and UK pound sterling to Canadian dollar exchange rates; and that Bristol Water will operate and perform in a manner consistent with the regulatory assumptions underlying AMP5 and management's assumptions of the final regulatory outcome for AMP6, including, among others: real and inflationary changes in Bristol Water's revenue, Bristol Water's expenses increasing in line with inflation and efficiency measures, and capital investment, leakage, customer service standards and asset serviceability targets being achieved.

Although the Corporation believes that it has a reasonable basis for the expectations reflected in these forward-looking statements and financial outlook, actual results may differ from those suggested by the forward-looking statements and financial outlook for various reasons, including: risks related to the Corporation's securities (dividends on common shares and preferred shares are not guaranteed; volatile market price for the Corporation's securities; shareholder dilution; and convertible debentures credit risk, subordination and absence of covenant protection); risks related to the Corporation and its businesses (availability of debt and equity financing; default under credit agreements and debt instruments; geographic concentration; foreign currency exchange rates; acquisitions, development and integration; environmental, health and safety; changes in legislation and administrative policy; and reliance on key personnel); risks related to the Corporation's power infrastructure facilities (power purchase agreements; completion of the Corporation's wind development projects; operational performance; contract performance and reliance on suppliers; land tenure and related rights; environmental; and regulatory environment); risks related to Värmevärden (operational performance; fuel costs and availability; industrial and residential contracts; environmental; regulatory environment; and labour relations); and risks related to Bristol Water (Ofwat price determinations and changes to Instrument of Appointment; failure to deliver capital investment programs; economic conditions; operational performance; failure to deliver water leakage target; SIM and the serviceability assessment; pension plan obligations; regulatory environment; competition; seasonality and climate change; and labour relations). For a comprehensive description of these risk factors, please refer to the "Risk Factors" section of the Corporation's annual information form dated March 26, 2014, as supplemented by disclosure of risk factors contained in any subsequent annual information form, material change reports (except confidential material changes reports), business acquisition reports, interim financial statements, interim MD&A and information circulars filed by the Corporation with the securities commissions or similar authorities in Canada (which are available under the Corporation's SEDAR profile at

The assumptions, risks and uncertainties described above are not exhaustive and other events and risk factors could cause actual results to differ materially from the results and events discussed in the forward-looking statements and financial outlook. The forward-looking statements and financial outlook within this document reflect current expectations of the Corporation as at the date of this document and speak only as at the date of this document. Except as may be required by applicable law, the Corporation does not undertake any obligation to publicly update or revise any forward-looking statements and financial outlook.

This document is not an offer or invitation for the subscription or purchase of or a recommendation of securities. It does not take into account the investment objectives, financial situation and particular needs of any investors. Before making an investment in the Corporation, an investor or prospective investor should consider whether such an investment is appropriate to their particular investment needs, objectives and financial circumstances and consult an investment adviser if necessary.