News Release

Capstone Infrastructure Corporation Reports Strong Second Quarter 2013 Performance


  • Quarterly and year-to-date revenue increased by 9.0% and 5.5%, respectively, due to increased production from the power segment and a higher regulated water rate at Bristol Water

  • Quarterly Adjusted EBITDA increased by 15.7%, mostly due to higher production in the power segment and a higher dividend from Värmevärden while year-to-date Adjusted EBITDA declined by 0.9%, reflecting the Corporation's lower ownership interest in Bristol Water

  • Quarterly and year-to-date AFFO increased by 143.2% and 21.7%, respectively, reflecting higher Adjusted EBITDA, lower maintenance expenses at Cardinal and a higher dividend from Värmevärden

  • Subsequent to quarter end, announced acquisition of Renewable Energy Developers Inc., which is expected to enhance Capstone's scope, scale and long-term value for shareholders

TORONTO, ONTARIO (August 12, 2013) – Capstone Infrastructure Corporation (TSX: CSE; CSE.DB.A; CSE.PR.A – the “Corporation”) today reported unaudited results for the second quarter of fiscal 2013 ended June 30, 2013. The Corporation’s Management’s Discussion and Analysis and unaudited consolidated financial statements are available at and on SEDAR at  All amounts are in Canadian dollars.

Financial Review

1"Adjusted EBITDA", “Adjusted Funds from Operations”, 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 6 of Management’s Discussion and Analysis with reconciliation to IRFS measures provided on page 7.

2While Bristol Water’s revenue and expenses are fully consolidated into Capstone’s financial results, its Adjusted EBITDA was adjusted to reflect Capstone’s 70% ownership interest, which was held between October 5, 2011 and  May 10, 2012, and subsequent 50% interest following the sale of a 20% interest to ITOCHU Corporation on May 10, 2012.

3Consolidated AFFO includes dividends received from Bristol Water, which is more reflective of the cash flow available to Capstone from the operating activities of Bristol Water. 

“We achieved strong overall business performance in the quarter, reflecting the quality of our businesses and sound operations across our portfolio," said Michael Bernstein, President and Chief Executive Officer. "Adjusted EBITDA and AFFO were both higher than in 2012 primarily due to increased power production at Cardinal and Erie Shores, lower maintenance costs at Cardinal, and a higher dividend from Värmevärden.  During the quarter, we continued to work toward a new contract for Cardinal and focused on identifying ways to maximize the value of our businesses, including investing in a software tool at Erie Shores to help boost the facility's annual energy production and working with Bristol Water to advance its capital expenditure program.  As we build value at our existing businesses, we are also continuing to pursue acquisition opportunities, most recently reaching an agreement to acquire Renewable Energy Developers Inc., an established developer and owner of wind power projects across Canada.  Once completed, we expect this transaction to contribute to long-term cash flow growth for Capstone and our shareholders." 

Financial Highlights

Revenue increased by 9.0%, or $7.7 million, over the same quarter in 2012, and by 5.5%, or $9.8 million,  on a year-to-date basis.  The increase was mostly due to higher power generation at Cardinal and Erie Shores and to increased revenue at Bristol Water arising from a higher regulated water rate, which increases annually.

Total expenses increased by 6.9%, or $3.5 million, in the second quarter, and by 5.0%, or $5.1 million, in the first six months of the year.  The variance reflected higher operating expenses, primarily due to higher fuel costs at Cardinal, increased project development costs mostly related to the planned acquisition of Renewable Energy Developers Inc. ("ReD"), and higher operations and maintenance fees at Bristol Water.   These factors were partially offset by lower administrative expenses, which declined by 30.9%, or $1.1 million, in the quarter and by 18.7%, or $1.1 million, in the first six months of 2013.

Adjusted EBITDA increased by 15.7%, or $4.3 million, in the quarter, reflecting higher power production and a higher dividend from Värmevärden.  Adjusted EBITDA for the first six months of the year declined by 0.9%, or $0.6 million, primarily reflecting the Corporation's lower interest in Bristol Water effective May 10, 2012 and lower electricity production in the first quarter of 2013.

AFFO increased by 143.2%, or $5.3 million, in the quarter and by 21.7%, or $4.0 million, in the year-to-date period, reflecting lower maintenance expenses at Cardinal, the higher dividend from Värmevärden, lower administrative expenses and the repayment of the Corporation's senior credit facility in the second quarter of 2012.  

Financial Performance Highlights by Segment

Power Infrastructure:

Revenue increased by 15.1%, or $6.1 million, in the quarter and by 6.2%, or $5.6 million, in the year-to-date period, primarily reflecting increased power production at Cardinal and Erie Shores due to fewer maintenance outages and improved wind conditions, respectively.  In addition, Whitecourt benefited from higher power pool prices.  These drivers were partially offset by lower power production at the hydro power facilities and Amherstburg as a result of unfavourable water and sunlight conditions, respectively, in both the quarter and year-to-date period.  However, total power production of 482.2 gigawatt hours (GWh) in the three months ended June 30, 2013 exceeded the average long-term production of 450.2 GWh for the second quarter of the year.

Adjusted EBITDA increased by 27.6%, or $4.4 million, in the quarter and by 7.9%, or $3.2 million in the first six months of the year, primarily reflecting higher power production and significantly lower maintenance costs at Cardinal.  AFFO increased by 164.6%, or $6.6 million, in the quarter and by 17.3%, or $3.9 million, in the first six months of the year. 



1 The Corporation acquired a 70% interest in Bristol Water on October 5, 2011 and subsequently sold a 20% indirect interest in the business on May 10, 2012.

The Corporation initially acquired a 70% interest in Bristol Water on October 5, 2011 and subsequently sold a 20% indirect interest in the business on May 10, 2012.

Revenue increased by 3.6%, or $1.6 million, in the quarter and by 4.8%, or $4.2 million, in the year-to-date period.  Bristol Water's Adjusted EBITDA contribution to the Corporation declined by 14.7%, or $2.0 million, in the quarter and by 18.8%, or $5.1 million, in the year-to-date period, reflecting the Corporation's reduced interest in the business.  Adjusted EBITDA before non-controlling interest declined by 0.2%, or $36.0 thousand, in the quarter and increased by 3.5%, or $1.5 million, in the first six months of the year, reflecting revenue growth partially offset by increased operating expenses.

Bristol Water paid dividends of $1.5 million and $3.1 million to the Corporation in the quarter and year-to-date periods, respectively, reflecting the Corporation's lower ownership interest compared with the same periods last year and the change in dividend frequency from semi-annually to quarterly.

During the quarter ended June 30, 2013, Bristol Water made $38 million in capital expenditures, thereby reducing its capital expenditure shortfall by 11%, as part of its approximately $460 million capital program for the current five-year asset management plan ("AMP5"), which concludes in March 2015.  As at June 30, 2013, Bristol Water had cumulative capital expenditures of $299 million over the AMP5 period, which was $34 million lower than the regulatory plan but consistent with management's expectations.  Bristol Water expects to achieve its planned cumulative capital expenditures by the end of the AMP5 period.

District Heating

During the second quarter of 2013, the dividend paid by V
ärmevärden to the Corporation increased by 215.8%, or $2.1 million, as Värmevärden distributed excess cash rising arising in part from strong prior year performance.  Värmevärden paid interest income of $0.7 million in the quarter and $1.4 million in the year-to-date period compared with $0.7 million and $2.0 million, respectively, in 2012.  The variance in the six-month period reflected the lower balance outstanding on the shareholder loan receivable as a result of the return of approximately $50 million in capital from Värmevärden in March 2012.

Financial Position

As at June 30, 2013, the Corporation had cash and cash equivalents of $49.5 million, including $26.7 million from the power segment and $9.1 million from Bristol Water.  Bristol Water has an additional $83.1 million in credit capacity to support its capital expenditure program.  

Approximately $27.8 million of the Corporations total cash and cash equivalents is available for general corporate purposes. As at June 30, 2013, the Corporations debt to capitalization ratio was 64.0%.  

Subsequent Events

On July 3, 2013, the Corporation entered into a definitive agreement to acquire 100% of the issued and outstanding shares of ReD by issuing common shares of Capstone pursuant to a plan of arrangement (the Transaction).  Under the terms of the Transaction, shareholders of ReD will receive 0.26 of a Capstone common share and $0.001 in cash for each share of ReD. Closing of the Transaction is subject to the approval of both Capstone and ReD shareholders and consents from certain third parties.


The Corporation expects continuing stable performance from its power generation and utilities businesses.  With the completion of the acquisition of ReD (the "Transaction"), in fiscal 2013 the Corporation expects to deliver Adjusted EBITDA of approximately $115 million to $125 million, reflecting the partial year contribution from ReD's operating wind power facilities offset by higher administration expenses as well as transaction-related costs and assuming the Transaction is completed by the end of the third quarter of 2013.  Other assumptions underlying the Corporation's 2013 outlook include:

  • Holding a 50% interest in Bristol Water for the full year following a partial sale of the Corporation's previous 70% interest in May 2012;

  • A lower average effective gas transportation rate in 2013 of $1.95 per gigajoule ("GJ") compared with $2.24 per GJ in 2012; and

  • Increased business development activity compared with 2012, which is expected to result in higher corporate costs.

A detailed outlook for the Corporation's power, utilities and corporate segments is available on pages 14 to 18 of the quarterly report.  The Corporation's strategic priorities for 2013 include:

Securing a new power purchase agreement ("PPA") for Cardinal.

During the quarter, the Corporation held regular meetings with the Ontario Power Authority that focused on a long-term solution for Cardinal, which will enable the Corporation to proceed with its plans to reconfigure and expand the facility, rather than on extending the existing PPA. 

Maximizing the performance of its existing businesses.

The Corporation continues to focus on further enhancing the operational performance of its businesses, which includes preventive maintenance, detailed planning for capital expenditures that boost value, and finding ways to increase cash flow such as the sale of RECs by Whitecourt and the investment in WindBOOST at Erie Shores, a software tool that is expected to result in a 1% to 3% increase in annual energy output.

Pursuing new investment opportunities.

With the addition of ReD, the Corporation will be a larger infrastructure company with power generation facilities across Canada totaling approximately net 465 MW of installed capacity and an attractive pipeline of contracted development opportunities in Nova Scotia, Ontario, Saskatchewan and Quebec representing net 79 MW of capacity.  In addition, the Corporation expects the Transaction to bolster its ability to successfully source, pursue and execute earlier-stage power opportunities.

The Corporation primarily concentrates its business development efforts on Canada, the United States, the United Kingdom, Western Europe and Australia, including operating infrastructure businesses and development opportunities that offer an appropriate risk-adjusted rate of return.

Dividend Declarations

The Board of Directors today declared a quarterly dividend of $0.075 per common share on the Corporation's outstanding common shares for the quarter ending September 30, 2013. The dividend will be payable on October 31, 2013 to shareholders of record at the close of business on September 30, 2013.

The Board of Directors also  declared a dividend on its Cumulative 5-Year Rate Reset Preferred Shares, Series A (the Preferred Shares) of $0.3125 per Preferred Share to be paid on or about October 31, 2013 to shareholders of record at the close of business on October 15, 2013.  The dividend on the Preferred Shares covers the period from August 1, 2013 to October 31, 2013.

In respect of the Corporations October 31, 2013 common share dividend payment, the Corporation will issue common shares in connection with the reinvestment of dividends to shareholder enrolled in the Corporations 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 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 October 31, 2013 to holders of record on September 30, 2013 of Class B Exchangeable Units of MPT LTC Holding LP, which is a subsidiary entity of the Corporation.

1See Notice to Readers

Dividend Reinvestment Plan

Learn more about the Corporations Dividend Reinvestment Plan (DRIP) at

Q2 Conference Call and Webcast

The Corporation will hold a conference call and webcast (with accompanying slides) on Tuesday, August 13, 2013 at 8:30 a.m. EDT to discuss second quarter results.  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 August 27, 2013. 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 Corporations website at

About Capstone Infrastructure Corporation

Capstone Infrastructure Corporations mission is to build and responsibly manage a high quality portfolio of infrastructure businesses in Canada and internationally in order to deliver a superior total return to shareholders by providing reliable income and capital appreciation.  The Corporations portfolio currently includes investments in gas cogeneration, wind, hydro, biomass and solar power generating facilities, representing approximately 370 MW of installed capacity, a 33.3% interest in a district heating business in Sweden, and a 50% interest in a regulated water utility in the United Kingdom.  Please visit for more information.

Notice to Readers

Certain of the statements contained within this news release 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”, “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 news release 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, 2012 under the heading “Results of Operations”, as updated in subsequently filed MD&A of the Corporation (such documents are available under the Corporation's profile on

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 acquisition (the “ReD Acquisition”) of all of the common shares of Renewable Energy Developers Inc. (“ReD”) will be completed by the end of the third quarter of 2013; that the business and economic conditions affecting the Corporation's and ReD'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 ReD's power infrastructure development projects achieving commercial operation; that Capstone's and ReD's power infrastructure facilities will experience normal wind, hydrological and solar irradiation conditions, and ambient temperature and humidity levels; an effective TCPL gas transportation toll of approximately $1.95 per gigajoule in 2013; that there will be no material change in the level of gas mitigation revenue historically earned by the Cardinal facility; that there will be no material changes to the Corporation's or ReD's facilities, equipment or contractual arrangements, no material changes in the legislative, regulatory and operating framework for the Corporation's or ReD's businesses, no material delays in obtaining required approvals and no material changes in rate orders or rate structures for Capstone's and ReD's power infrastructure facilities, Värmevärden or Bristol Water, no material changes in environmental regulations for power infrastructure facilities, Värmevärden or Bristol Water and no significant event occurring outside the ordinary course of business; that the amendments to the regulations governing the mechanism for calculating the Global Adjustment (which affects the calculation of the DCR escalator under the PPA for the Cardinal facility and price escalators under the PPAs for the hydro power facilities located in Ontario) will continue in force; 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 to the 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, including, among others: real and inflationary increases in Bristol Water's revenue, Bristol Water's expenses increasing in line with inflation, 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: the conditions of the ReD Acquisition not being satisfied; risks related to the integration of the Corporation's and ReD's businesses;  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 and development; environmental, health and safety; changes in legislation and administrative policy; and reliance on key personnel); risks related to the Power Infrastructure Facilities (power purchase agreements; operational performance; fuel costs and supply; contract performance; land tenure and related rights; environmental; regulatory environment); risks related to Bristol Water (Ofwat price determinations; 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); and risks related to Värmevärden (operational performance; fuel costs and availability; industrial and residential contracts; environmental; regulatory environment; and labour relations)

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 news release 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 news release 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.