News Release

Capstone Infrastructure Corporation Reports Strong Third Quarter 2014 Performance

TORONTO, ONTARIO--(Marketwired - Nov. 11, 2014) - Capstone Infrastructure Corporation (TSX:CSE)(TSX:CSE.DB.A)(TSX:CSE.PR.A)(TSX:CPW.DB) (the "Corporation") -


  • Quarterly and year-to-date revenue increased by 13.9% and 16.4% respectively, attributable to growth in the power segment, higher contracted rates at Cardinal and increased contribution from Bristol Water
  • Quarterly and year-to-date Adjusted EBITDA increased by 22.5% and 25.3% respectively, a result of the larger wind portfolio and higher contribution from Bristol Water
  • Quarterly and year-to-date AFFO increased by 61.9% and 43.9% respectively, reflecting increased contribution from the power segment and lower taxes
  • Advanced the development pipeline, including closing $76M financing for the 25-MW Goulais wind power facility and achieving commercial operations at Skyway 8

Capstone Infrastructure Corporation (TSX:CSE)(TSX:CSE.DB.A)(TSX:CSE.PR.A)(TSXCPW.DB) (the "Corporation") today reported unaudited results for the third quarter of fiscal 2014 ended September 30, 2014. 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

In millions of Canadian dollars or on a per share basis unless otherwise noted Quarter ended
September 30
Variance (%) Nine months ended September 30 Variance
2014 2013 2014 2013
Revenue 104.1 91.4 13.9 324.9 279.2 16.4
Net income 6.8 20.7 (66.9 ) 34.7 51.2 (32.2 )
Adjusted EBITDA1,2 32.2 26.3 22.5 113.3 90.4 25.3
AFFO1,3 5.4 3.3 61.9 37.4 26.0 43.9
AFFO per share1,3 0.056 0.044 27.7 0.388 0.342 13.5
Dividends per share 0.075 0.075 - 0.225 0.225 -
Payout ratio1 134 % 171 % (21.7 ) 58 % 66 % (11.9 )
(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 and 7 of Management's Discussion and Analysis with reconciliation to IRFS measures provided on page 7.
(2) Adjusted EBITDA for investments in subsidiaries with non-controlling interests are included at Capstone's proportionate ownership interest.
(3) For businesses that are not wholly owned, the cash generated by the business is only available to Capstone through periodic dividends. For these businesses, AFFO is equal to distributions received.

"The third quarter of 2014 was a highly active period for Capstone," said Michael Bernstein, President and Chief Executive Officer. "We posted solid financial results, thanks to our diversified, stable portfolio. Our wind development projects continued to move forward and we launched major maintenance work at the Cardinal plant. At Bristol Water, the focus was on engaging with the regulator to reach a favourable outcome for the upcoming five-year regulatory period. We also evaluated a number of external growth opportunities, particularly in the P3 area."

Financial Highlights

Revenue increased by 13.9%, or $12.7 million, over the same quarter in 2013, and by 16.4%, or $45.7 million, on a year-to-date basis. The increase was due to higher contribution from Bristol Water as a result of favourable foreign currency translation, higher regulated rates and increased water consumption. The expanded power portfolio acquired in the Renewable Energy Developers (ReD) transaction last year also contributed to higher revenue.

Total expenses increased by 5.9%, or $3.2 million, in the third quarter, and by 8.2%, or $13.1 million, in the first nine months of the year. The variance reflected higher operating costs related to foreign exchange appreciation at Bristol Water and higher wind power operational expenses. These factors were partially offset by lower operating expenses at Cardinal as a result of reduced production and gas transportation costs.

Adjusted EBITDA increased by 22.5%, or $5.9 million, in the quarter, and by 25.3%, or $22.9 million year to date, reflecting higher wind power production and higher contracted power rates at Cardinal. Beneficial foreign exchange impacts and higher revenues from Bristol Water were partially offset by higher operating costs related to increased headcount following the acquisition of ReD.

AFFO increased by 61.9%, or $2.1 million, in the quarter and by 43.9%, or $11.4 million, in the year-to-date period, the result of higher Adjusted EBITDA. The gains were offset by higher debt interest and principal payments related to the projects acquired from ReD. On a per-share basis, AFFO increased 27.7% in the quarter, to $0.056 and rose 13.5% to $0.388 year to date.

Financial Performance Highlights by Segment

Power Infrastructure:

In millions of Canadian dollars unless otherwise noted Quarter ended
September 30
Variance (%) Nine months ended September 30 Variance (%)
2014 2013 2014 2013
Power generated (GWh) 349 429 (18.6 ) 1,315.5 1,420.5 (7.4 )
Revenue 42.9 40.5 6.0 148.1 136.9 8.2
Adjusted EBITDA 19.7 16.8 16.8 75.8 60.5 25.3
AFFO 9.2 6.5 42.2 46.2 33.3 38.8

Revenue increased by 6.0%, or $2.4 million in the third quarter mostly attributable to capacity gained from the ReD acquisition. Year to date, revenue was higher by 8.2%, or $11.2 million, partly as a result of increased revenue from higher production at the Amherstburg Solar Park. This was partially offset by decreased revenue from lower production at Cardinal, reduced output from the hydro facilities and lower average power pool prices at Whitecourt.

Adjusted EBITDA increased by 16.8%, or $2.8 million in the quarter, and 25.3% or $15.3 million year to date, reflecting lower operating expenses from gas mitigation and decreased gas transportation costs at Cardinal. AFFO increased by 42.2%, or $2.7 million, due to the growth in Adjusted EBITDA, lower maintenance expenditures at the power assets, and distributions received from the Amherst wind power facility. These drivers were partially offset by additional debt service and maintenance capital expenditures related to the Corporation's expanded wind power portfolio.



In millions of Canadian dollars unless otherwise noted Quarter ended
September 30
Variance (%) Nine months ended September 30 Variance (%)
2014 2013 2014 2013
Water supplied (megalitres) 21,745 21,820 (0.3 ) 62,195 61,753 0.7
Revenue 61.2 50.9 20.1 176.8 142.3 24.2
Adjusted EBITDA before NCI 31.2 25.3 23.6 88.4 69.3 27.5
Adjusted EBITDA 15.6 12.6 23.6 44.2 34.6 27.5
AFFO 1.9 1.7 11.7 6.2 4.8 30.5
1 Bristol Water's contribution to Capstone's AFFO consists of dividends and does not reflect the amount of cash generated by the business.

Revenue was $10.2 million, or 20.1%, higher for the quarter and $34.4 million, or 24.2%, higher year to date. Excluding foreign currency, revenue was $3.7 million, or 6.9% higher for the quarter and $12.5 million, or 7.6% on a year-to-date basis. The balance of the variance was attributable to $3.6 million and $10.5 million in higher water tariffs for the quarter and year to date, respectively, following the annual increase on April 1, 2014. In addition, higher water consumption contributed $0.2 million and $2.0 million for the quarter and year to date, respectively.

Bristol Water paid dividends of $1.9 million to the Corporation in the quarter and $6.2 million year to date, compared with $1.7 million in the same quarter and $4.8 million in the nine-month period last year, reflecting a scheduled increase and the effect of favourable foreign currency translation.

As at September 30, 2014, cumulative capital expenditures incurred during AMP5 were $507 million, which is ahead of the original plan agreed with the Water Services Regulation Authority ("Ofwat"). Capstone expects its cumulative capital expenditures over AMP5, ending March 31, 2015, to comply with the regulator-approved capital expenditure.

District Heating

In millions of Canadian dollars unless otherwise noted Quarter ended
September 30
Variance (%) Nine months ended September 30 Variance (%)
2014 2013 2014 2013
Heat production (GWh) 126 127 (0.8 ) 698 768 (9.1 )
Interest income 0.7 0.7 (1.1 ) 2.2 2.1 3.5
Adjusted EBITDA and AFFO 0.7 0.7 (1.1 ) 5.2 5.2 (0.1 )
1 Varmevarden'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.

For the third quarter of 2014, no dividends were received or expected from Värmevärden. Year-to-date dividends received were consistent with 2013. During the first nine months of 2014, Värmevärden paid interest on the outstanding balance of the shareholder loan receivable of $2.2 million, which was $0.1 million higher year to date than in the first nine months of 2013. Värmevärden paid interest income of $0.7 million in the quarter, similar to the same quarter last year; year to date, the change reflects favourable foreign currency translation.

Financial Position

As at September 30, 2014, the Corporation had unrestricted cash and cash equivalents of $58.9 million, including $26.0 million from the power segment and $6.7 million from Bristol Water. Bristol Water has an additional $36.4 million in credit capacity to support its capital expenditure program. Approximately $36.6 million of the Corporation's total cash and cash equivalents is available for general corporate purposes. As at September 30, 2014, the Corporation's debt to capitalization ratio was 65.8%.


The Corporation expects continuing stable performance from the majority of its power facilities, some growth from Cardinal and its utilities businesses, and a full year of contribution from its expanded wind power portfolio. The Corporation expects Adjusted EBITDA in 2014 to be between $150 million and $160 million, as articulated in our first quarter report. Other assumptions underlying the Corporation's 2014 outlook include but are not limited to:

  • The Corporation deploying its internally generated cash and credit into its development projects and that the projects proceed as expected;
  • That the currency exchange rates between the Canadian dollar relative to the British pound sterling and the Swedish krona remain consistent with recent rates; and
  • Business development activity that is consistent with historical levels.

A detailed outlook for the Corporation's power and utilities segments, and corporate is available on pages 12- 20 of the quarterly report.

The Corporation's strategic priorities for 2014 include:

Maximizing the performance of its existing businesses.

The Corporation is focused on continuing to enhance the operational performance of its businesses by conducting preventive and predictive maintenance, carefully planning for capital expenditures that boost value, and finding new ways to increase cash flow. Part of this program includes the $30 million refurbishment and life extension of the Cardinal gas plant, necessary to prepare the facility to operate on a cycling basis in the spring of 2015 under its new non-utility generator contract with the Ontario Power Authority.

Advancing its pipeline of power development projects.

The Corporation is focused on advancing its near-term wind power projects on time and on budget. The 9.5 MW Skyway 8 facility was commissioned on August 7, 2014, with a declared commercial operation date of August 14, 2014. The 24 MW Saint-Philémon project, under construction in Quebec, is expected to achieve commercial operation in early 2015, and the 25 MW Goulais project is expected to achieve commercial operation by the second quarter of 2015. The balance of the wind pipeline is now going through the permitting process and is anticipated to enter commercial operations between 2015 and 2016, following receipt of the required permits.

Advancing organic growth initiatives.

The Corporation is working with management at Bristol Water to complete the utility's capital expenditure program for the current regulatory period, which concludes in March 2015 ("AMP5"). Bristol Water has eliminated an earlier capital expenditure shortfall and is again on pace to achieve AMP5 targets. The Corporation is also supporting the Bristol Water team on the regulatory submission for the next five-year period, which commences in April 2015 and concludes in March 2020 ("AMP6"). The response to the draft determination, published on August 29, 2014 related to the AMP6 business plan, was submitted to Ofwat, on October 3, 2014. Bristol Water is engaging with Ofwat to bridge differences in the total expenditure proposed in the business plan before the final determination on AMP6 is published on December 12, 2014.

Focusing on acquisitions that will increase the Corporation's value.

The Corporation is focused on building its portfolio across categories that may include utilities, power, public-private partnerships (P3s) and transportation. In the third quarter, assessing opportunities in the P3 category was a priority. The Corporation's business development efforts are concentrated primarily on North America, the United Kingdom, and Western and Northern Europe, with Australia and New Zealand remaining markets of interest.

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 December 31, 2014. The dividend will be payable on January 30, 2015 to shareholders of record at the close of business on December 31, 2014.

The Board of Directors also declared a dividend on the Corporation's Cumulative 5-Year Rate Reset Preferred Shares, Series A (the "Preferred Shares") of $0.3125 per Preferred Share to be paid on or about January 30, 2015 to shareholders of record at the close of business on January 15, 2015. The dividend on the Preferred Shares covers the period from August 1, 2014 to October 31, 2014.

In respect of the Corporation's January 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 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 January 30, 2015 to holders of record on December 31, 2014 of Class B Exchangeable Units of MPT LTC Holding LP, which is a subsidiary entity of the Corporation.

Dividend Reinvestment Plan

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

Q3 Conference Call and Webcast

The Corporation will hold a conference call and webcast (with accompanying slides) on Wednesday, November 12, 2014 at 8:30 a.m. EST to discuss third 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 November 26, 2014. 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 449 megawatts2. Please visit for more information.

1 - See Notice to Readers.
2 - Reflects 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 the 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, 2013 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; an effective TCPL gas transportation toll of approximately $1.65 per gigajoule in 2014; 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, Värmevärden or Bristol Water, that there will be no material changes in environmental regulations for 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 Alberta; 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 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 asset management plan ("AMP") 5 and those expected under AMP6, 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: 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; fuel costs and supply; 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; service incentive mechanism ("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 risk factors contained in any material change reports (except confidential material change reports), business acquisition reports, interim financial statements, interim management's discussion and analysis and information circulars filed by the Corporation with 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.