Macquarie Power & Infrastructure Income Fund Announces First Quarter Results
- Maintained stable distributions to unitholders
- Continuing conservative financial position
TORONTO, ONTARIO (May 6, 2009) – Macquarie Power & Infrastructure Income Fund
(TSX: MPT.UN; MPT.DB – “MPT” or the “Fund”), which owns and operates essential
infrastructure assets, today reported unaudited results for the first quarter ended March 31,
2009. The Fund’s Management’s Discussion and Analysis and unaudited financial statements
are available on the Fund’s website at www.macquarie.com/mpt and on SEDAR at
“We delivered stable distributions to unitholders in the first quarter of 2009, reflecting the
essential nature and underlying reliability of our infrastructure businesses,” said Michael
Bernstein, the Fund’s interim President and Chief Executive Officer. “While our businesses are
fundamentally sound, operating results from our power infrastructure portfolio reflected
seasonal fluctuations in wind speed and water flows as well as outages at our Whitecourt and
Cardinal facilities due to maintenance activities. Leisureworld continued to perform consistently
with stable occupancy across its homes and growth in the accommodation rate of premium
For 2009, the Fund currently anticipates maintaining distributions to unitholders of $1.05 per
unit, barring any significant events or growth initiatives. Based on management’s current
operational outlook for the balance of the year, the Fund currently expects its 2009 payout
ratio to slightly exceed 100% of the Fund’s distributable cash.1 The Fund’s general reserve
account ensures the Fund’s ability to support distributions to unitholders in 2009 if required.
Mr. Derek Brown, Chairman of the Fund’s Board of Trustees, thanked Mr. Gregory Smith for
his contribution to the Fund as President and Chief Executive Officer since 2005 and before
that as Trustee from 2004, saying, “Under Greg’s leadership, the Fund has evolved from just
one asset to a diversified portfolio of infrastructure businesses. The continuing resilience of
the Fund’s operational performance is a strong reflection of both the quality of our businesses
as well as how they have been managed. On behalf of the Board of Trustees, I would like to
thank Gregory for his commitment to the Fund and to our unitholders.”
First Quarter Financial Performance
Revenue for the quarter was $40.3 million compared with $43.7 million in the first quarter of
2008. The decrease reflected lower power production, which was attributable to lower water
flows at the hydro power facilities, a lower average wind speed at Erie Shores Wind Farm
(“Erie Shores”) and increased outages at the Whitecourt biomass (“Whitecourt”) and Cardinal
gas cogeneration (“Cardinal”) facilities than in the same period last year. These factors were
partially offset by higher power prices at Cardinal under its Power Purchase Agreement
(“PPA”). In addition, revenue in the first quarter of 2008 reflected a $1.1-million payment
received from the Ontario Electricity Financial Corporation (“OEFC”) due to an adjustment in
the Direct Consumer Rate (“DCR”) while the Fund paid a $0.3-million DCR adjustment to the
OEFC in the first quarter of 2009.
The Fund’s distributable cash was $15.0 million ($0.300 per unit) compared with $16.5 million
($0.330 per unit) in 2008. Declared distributions to unitholders were $13.1 million ($0.262 per
unit), representing a payout ratio of 87.6%. Declared distributions to unitholders in the first
quarter of 2008 were also $13.1 million ($0.262 per unit), representing a payout ratio of 79.5%.
Income from operations2 for the Fund was $6.1 million compared with $10.7 million in the first
quarter of 2008. This variance reflected lower revenue as well as higher operating expenses
due to increased outages at Whitecourt, increased maintenance costs and higher gas
transportation costs than in the same quarter last year. These factors were partially offset by
lower administrative expenses, which primarily reflected lower business development costs.
As at March 31, 2009, the Fund had positive working capital of $45.5 million and cash on hand
and short-term investments of $30.3 million as well as fully funded general, major maintenance
and capital expenditure reserve accounts in the aggregate amount of $14.9 million. The Fund
is conservatively leveraged relative to the low risk profile and long life of its assets, with a debt
to capital ratio of 46.6%.
First Quarter Operational Highlights
Total power production was 541,603 MWh compared with 568,838 MWh in the first quarter of
Cardinal produced 340,594 MWh of electricity (Q1 2008 – 346,244 MWh), reflecting 22 hours
of outage (Q1 2008 – nil) for maintenance as well as higher average ambient temperatures
compared with the same period last year. The facility achieved an availability of 98.9% (Q1
2008 – 99.9%) and a capacity factor of 97.9% (Q1 2008 – 98.5%).
Erie Shores produced 71,910 MWh (Q1 2008 – 81,933 MWh) of power, reflecting
unseasonably low wind speed and density during the quarter. The facility achieved an overall
availability of 96.1% (Q1 2008 – 97.4%) and a capacity factor of 33.6% (Q1 2008 – 38.1%).
The Fund’s hydro power facilities produced 23,635 MWh (Q1 2008 – 29,937 MWh) of
electricity. The hydro power facilities generally experienced colder than normal temperatures
and less precipitation, which resulted in lower water flows than in the first quarter of 2008. As a
result, the hydro power facilities operated at a capacity factor of 30.7% (Q1 2008 – 38.6%).
Overall, the hydro power facilities achieved a weighted average availability of 99.2% (Q1 2008
– 92.9%), reflecting 197 hours of outage (Q1 2008 – 384).
Whitecourt produced 44,232 MWh of electricity (Q1 2008 – 52,109 MWh), primarily reflecting
276 hours of outage (Q1 2008 – nil) for repairs and maintenance. As a result, the facility
operated at an availability of 87.2% (Q1 2008 – 100.0%) and achieved a capacity factor of
86.6% (Q1 2008 – 98.7%).
The Chapais biomass facility (“Chapais”), in which the Fund holds a minority preferred equity
and debt interest, produced 61,232 MWh (Q1 2008 – 58,615 MWh) of electricity. The facility
experienced availability of 100.0% (Q1 2008 – 96.6%), reflecting zero hours of outage (Q1
2008 - 75 hours), and achieved a capacity factor of 99.5% (Q1 2008 – 95.0 %).
The Fund owns an indirect 45% equity interest in Leisureworld Senior Care LP
(“Leisureworld”), which the Fund accounts for as an equity investment. In the first quarter,
Leisureworld achieved a 15.3% increase in revenue, reflecting a full quarter of results from the
seven homes acquired on January 31, 2008, and continued to benefit from increases in private
accommodation and government funding rates. Average total occupancy in the first quarter
was 98.1% (Q1 2008 - 98.1%). The average occupancy of private rooms was 94.4% (Q1
2008 – 91.9%).
“Our primary emphasis in 2009 is on enhancing the operational performance of our businesses
to maintain their cash flow stability. We are also focused on developing a firm strategy to
address the impact of taxation in 2011 on the Fund’s structure and future distribution profile
and expect to provide more guidance on our direction by the end of 2009. We continue to
expect that fiscal 2010 will be a transitional year for the Fund,” said Mr. Bernstein.
Mr. Bernstein added, “At the same time, we have the financial flexibility to pursue appropriate
small- to mid-sized growth opportunities that meet our investment and return criteria, which
could include power infrastructure assets, particularly in the renewable energy sector,
additional long-term care homes or new categories of infrastructure, such as water distribution,
schools, hospitals and roads, including through public-private partnerships. We are committed
to building MPT into Canada’s leading infrastructure investment vehicle and to delivering an
attractive total return to our investors through 2011 and beyond.”
In 2009, Cardinal is expected to generate lower revenue than in 2008, which primarily reflects
the hot gas path inspection that required 13 days of outage in April. While Cardinal will
continue to experience higher gas transportation costs, the confirmed 2009 rate of $1.19/GJ is
below the average 2008 level. As a result of these factors, cash flow from Cardinal will be
slightly lower on a year-over-year basis.
Erie Shores is expected to generate average annual long-term production of 249,800 MWh,
subject to wind speed and density, which are typically strongest during the fall and winter
months. During April, Erie Shores completed work on a connection to a second transmission
line, which will enable the facility to continue delivering its power to the grid during periods of
outage on the existing Hydro One line, thereby helping to maximize availability.
The hydro power facilities are expected to produce average long-term annual production of
166,360 MWh, subject to water flows, which are typically strongest during the spring and fall
months. A key efficiency initiative in 2009 is to automate the storage and release of water in
the lake that serves the Sechelt facility, which will enable the facility to remotely control water
flows, and, accordingly, maximize production.
Whitecourt is scheduled for an approximately 24-day outage commencing in June to address a
higher than normal vibration of the turbine, which was identified in the fourth quarter of 2008.
Regular maintenance work, typically requiring four days of outage, is also scheduled for the
autumn. Whitecourt continues to work closely with the Millar Western Group of Companies
(“Millar Western”), which supplies a majority of the facility’s wood waste fuel, to ensure a
continuing stable and adequate supply of wood waste. Under the terms of Whitecourt’s supply
contract with Millar Western, in the event that Millar Western does not supply the minimum
required quantity of wood waste it must pay Whitecourt’s cost to source replacement fuel,
subject to certain exceptions. For the year, Whitecourt is expected to achieve an availability of
approximately 86% to 90%, which is generally consistent with 2008.
Leisureworld is continuing to focus on enhancing the quality of care and accommodation for
residents, which contributes to the continuing high occupancy of its homes. In addition,
Leisureworld is continuing to attract a growing number of residents to private accommodation,
for which Leisureworld receives a regulated premium. Leisureworld’s agreement to acquire
the Good Samaritan Seniors Complex (“Good Samaritan”), which was signed on February 1,
2008, was terminated in accordance with its terms on March 16, 2009, which was the outside
date to close the transaction, as approval from the Ministry of Health and Long-Term Care had
not yet been obtained. The Fund currently anticipates that Leisureworld’s distribution policy
will be maintained for fiscal 2009.
Conference Call and Webcast
Management of the Fund will hold a conference call (with accompanying slides) to discuss first
quarter results on Thursday, May 7, 2009 at 8:30 a.m. ET. The conference call will be
accessible via webcast through the Fund’s website with accompanying slides at
www.macquarie.com/mpt and by telephone at 416-641-6139 (Canada) or 1-866-542-4262
(North America). A replay of the call will be available until May 21, 2009 by dialling 416-695-
5800 or 1-800-408-3053 and entering the passcode 5405583.
Distribution Reinvestment Plan (DRIP)
Eligible unitholders may elect to participate in the Fund’s Distribution Reinvestment Plan. For
more information about the DRIP, please visit the Fund’s website at www.macquarie.com/mpt.
About the Fund
Macquarie Power & Infrastructure Income Fund invests in essential infrastructure assets in
North America with an emphasis on power infrastructure. MPT’s strategy is to acquire and
actively manage a diverse, high quality portfolio of infrastructure assets to improve their
financial performance and provide growing and sustainable distributions to unitholders. MPT’s
portfolio includes investments in gas cogeneration, wind, hydro and biomass power generating
facilities, representing approximately 350 MW of installed capacity, and a 45% interest in
Leisureworld Senior Care LP, a leading provider of long-term care, or social infrastructure, in
Ontario. MPT is managed by a wholly-owned subsidiary of Macquarie Group Limited. Please
visit www.macquarie.com/mpt for additional information.
1 Distributable cash is defined as cash flows from operating activities after removing changes in working capital and reflecting the
impacts of releases from maintenance reserves, allocations to major maintenance and capital expenditure reserves, non-discretionary
payments and receipts, and distributions from Leisureworld.
2 Income from operations refers to income before net interest, foreign exchange, share of income (losses) from long-term investments,
unrealized gains (losses) on swap contracts and on embedded derivatives in gas purchase contracts, gain on sale of capital assets,
Certain statements in this news release may constitute “forward-looking” statements, which involve known and
unknown risks, uncertainties and other factors that may cause the actual results to be materially different from any
future results expressed or implied by such forward-looking statements. When used in the this news release, such
statements use such words as “may”, “will”, “expect”, “believe”, “plan” and other similar terminology. Forward-looking
statements involve significant risks and uncertainties, should not be read as guarantees of future performance or
results and will not necessarily be accurate indications of whether or not such results will be achieved. The forwardlooking
statements contained in this news release are based on information currently available and what the Fund
currently believes are reasonable assumptions, including the material assumptions for each of the Fund’s assets set
out in the Fund’s 2008 Annual Report under the headings “Outlook” on pages 23 to 24, as updated in subsequently
filed quarterly Financial Reports of the Fund. However, the Fund cannot assure investors that actual results will be
consistent with these forward-looking statements. These forward-looking statements are made as of the date of this
news release, and, except as required by law, the Fund does not undertake any obligation to update publicly or to
revise any of the included forward-looking statements, whether as a result of new information, future events or
otherwise. The Fund cautions readers not to place undue reliance on any forward-looking statements contained in this
news release. The forward-looking statements contained in this news release are expressly qualified by this
The forward-looking information contained in this news release is presented for the purposes of assisting investors
and analysts in understanding the Fund’s financial position and our stated priorities and objectives may not be
appropriate for other purposes. The Fund cautions readers not to place undue reliance on any forward-looking
statements, which speak only as of the date made. A number of factors could cause actual results to differ materially
from the results discussed in the forward-looking statements, including, but not limited to, risks associated with: the
operational performance of the Fund’s assets; power purchase agreements; fuel costs, supply and transportation;
default under credit agreements; regulatory regime and permits; land tenure and related rights; government regulation
and funding; the ability to complete future acquisitions; LTC home ownership and operation; minority ownership
interest in Leisureworld; reliance on key personnel; default under Leisureworld’s long-term debt and credit facility;
labour relations and cost; the variability of distributions; unitholder liability; dependence on Macquarie Power
Management Ltd., the manager of the Fund, and potential conflicts of interest; insurance; and risks related to the
environmental, health and safety regimes within which the Fund’s assets operate. The risks and uncertainties
described above are not exhaustive and other events and risk factors, including risk factors disclosed in Fund’s filings
with Canadian securities regulatory authorities, could cause actual results to differ materially from the results
discussed in the forward-looking statements.
Non-GAAP Financial Measures
"Income from operations" and "distributable cash" do not have any standardized meaning under Canadian GAAP.
Management believes they are useful measures of performance as they provide investors with indications of income
from operations and the amount of cash available for distribution to unitholders. The Fund's method of calculating
"income from operations" and "distributable cash" may not be comparable to other similarly named calculations.
For further information, please contact:
Vice President & Chief Financial Officer
Tel: (416) 607 5198
Vice President, Communications and Investor Relations
Tel: (416) 649 1325