News Release

Capstone Infrastructure Corporation Reports Fourth Quarter and Year End 2012 Results

Fiscal 2012 Highlights:

•       Achieved 65.6% increase in annual revenue, primarily due to full year contributions from Bristol Water and Amherstburg Solar Park

•       Strong overall performance from portfolio during year partially offset by lower power production

•       Annual Adjusted EBITDA (excluding internalization costs) increased by  60.1% to $120.7 million, slightly ahead of expectations

•      Increased annual AFFO by 1.9%, reflecting the impact of higher debt repayments in the power segment

Fourth Quarter Highlights:

•       Revenue increased by 3.3%, primarily reflecting a regulated increase in rates at Bristol Water

•       Adjusted EBITDA decreased by 1.1%, primarily due to Capstones lower ownership interest in Bristol Water compared with the fourth quarter of 2011

•       AFFO increased by 34.6%, primarily due to lower business development expenses

TORONTO, ONTARIO (March 7, 2013) – Capstone Infrastructure Corporation (TSX: CSE; CSE.DB.A; CSE.PR.A – the “Corporation”) today reported audited results for the fiscal year ended December 31, 2012.  The Corporation’s 2012 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.

Financial Review

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 pages 20 and 21 of Management’s Discussion and Analysis with reconciliation to IFRS measures provided on page 21.

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 between October 5, 2011 and May 9, 2012 and subsequently reduced to 50% to reflect Capstone’s sale of a 20% interest to ITOCHU Corporation on May 10, 2012.

3Adjusted EBITDA, AFFO and AFFO per share for the year and quarter ended December 31, 2011 exclude $19.7 million and $354,000, respectively, in costs related to the internalization of management.
4Consolidated 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.

“In 2012, Capstone delivered Adjusted EBITDA of $120.7 million, slightly ahead of our expectations and reflecting strong operational performance across our businesses.  We also took a number of steps to lower our risk profile, including strengthening our balance sheet, establishing a new dividend policy that is intended to offer stable income for shareholders, and broadening our capabilities by establishing a new power development subsidiary," said Michael Bernstein, President and Chief Executive Officer.  "Our top priorities for 2013 are to secure a new contract for Cardinal and to create a pipeline of new growth opportunities that will enable us to build the size, scope and value of our company.  We are supported in this pursuit by Capstone's sound fundamentals, which include a high quality portfolio, financial flexibility and a seasoned team of infrastructure professionals.”

Fiscal 2012 Highlights

Consolidated revenue for the year increased by 65.6%, or $141.6 million, reflecting a full year of contribution from Bristol Water, which was acquired in October 2011, and from Amherstburg Solar Park, which commenced operations in June 2011, partially offset by lower power production overall.

Total expenses increased by 29.1%, or $46.6 million, which was largely attributable to the addition of Bristol Water, higher fuel transportation costs at the Cardinal gas cogeneration facility and a full year of staffing expenses since internalization in April 2011.  These variables were partially offset by lower business development expenses in 2012.  Excluding internalization costs, total expenses increased by 47.2% during the year.

Adjusted EBITDA, excluding internalization costs, increased by 60.1%, or $45.3 million, driven primarily by Bristol Water and Amherstburg Solar Park.  AFFO, excluding internalization costs, increased by 1.9%, or $0.7 million, due to positive contributions from the utilities segment, which was partially offset by lower AFFO from the power segment due mostly to the impact of amortizing debt, which was higher in 2012 than in 2011.  The Corporation also paid a full year of dividends, including applicable taxes, on its preferred shares, which were issued on June 30, 2011.

Fourth Quarter Financial Highlights

During the fourth quarter, the Corporation's revenue increased by 3.3%, or $3.0 million, over the same period in fiscal 2011, reflecting higher revenue at Bristol Water attributable to an increase in the regulated water rate charged to customers.  Higher fourth quarter revenue also reflected revenue growth in the power segment attributable to increased power generation at the hydro power facilities and at Cardinal, which was partially offset by lower power production at Erie Shores.  Total expenses were 2.0%, or $1.1 million, lower than in the fourth quarter of 2011, reflecting lower project development costs which were partially offset by higher operating expenses at Bristol Water.  Fourth quarter Adjusted EBITDA declined by 1.1%, primarily due to the Corporation’s lower ownership interest in Bristol Water compared with the fourth quarter of 2011.  AFFO during the quarter increased by 34.6%, primarily due to lower business development expenses.

Financial Performance Highlights by Segment

Power Infrastructure:

Power segment revenue increased 4.0%, or $6.8 million, in 2012, primarily attributable to a full year of operations at Amherstburg Solar Park.  In addition, the Whitecourt biomass facility increased revenue by $1.0 million, primarily due to the increased sale of renewable energy credits (“RECs”). These positive drivers were partially offset by lower production at Cardinal, resulting from the outage for its scheduled hot gas path inspection in the second quarter of the year, and a decline in gas sales as Cardinal had previously entered into gas swaps at higher prices with the last swap expiring in 2011. Production at Erie Shores Wind Farm and the hydro power facilities also declined by 1.4% and 2.8%, respectively, over 2011.

Adjusted EBITDA increased by 7.6%, or $5.5 million, reflecting the increase in revenue partially offset by higher gas transportation costs at Cardinal.  AFFO declined by 12.4%, or $6.2 million, primarily reflecting higher debt service expenses, including debt amortization, and higher maintenance capital expenditures attributable to Cardinal's hot gas path inspection.



1 Capstone acquired a 70% interest in Bristol Water on October 5, 2011, which was reduced to 50% on May 10, 2012 following the sale of an interest representing 20% of Bristol Water to a subsidiary of ITOCHU Corporation.

2Bristol Water's contribution to Capstone's AFFO consists of dividends and does not reflect the amount of cash generated by the business. 

The Corporation's interest in Bristol Water was acquired on October 5, 2011.  On May 10, 2012, the Corporation sold an interest representing 20% of Bristol Water to a subsidiary of ITOCHU Corporation.

In 2012, Bristol Water generated revenue of $178.4 million and Adjusted EBITDA of $48.5 million, representing approximately 49.8% of the Corporation's revenue and approximately 40.2% of the Corporation's Adjusted EBITDA, respectively.  During the year, the Corporation received $8.1 million in dividends from Bristol Water compared with $4.0 million in 2011.

District Heating

1 Only nine months of activity from the date of acquisition are included in the year ended December 31, 2011.

2 Värmevärden'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 2012, Värmevärden paid $3.4 million of interest income to the Corporation compared with $5.0 million in 2011. The variance reflected the Corporation's repatriation of approximately $49.4 million of its initial investment in March 2012, thereby reducing the balance outstanding on the shareholder loan receivable.  Värmevärden also paid $2.0 million in dividends during 2012 compared with nil in 2011.  As a result, Värmevärden contributed $5.4 million to the Corporation's Adjusted EBITDA and AFFO during the year compared with $5.0 million in 2011.

Financial Position

As at December 31, 2012, the Corporation had cash and cash equivalents of $49.6 million.  This balance included:

•       $20.9 million from the power segment; and

•       $25.3 million from the utilities-water segment, which, along with $111.1 million in credit capacity added at Bristol Water during the year, will be used to support Bristol Water's capital investment program. 

Approximately $15.9 million of the Corporation's total cash and cash equivalents, including $12.6 million million from the power segment, is available for general corporate purposes.  As at December 31, 2012, the Corporation's debt to capitalization ratio was 62.7%, which primarily reflects lower corporate debt following the repayment of debt to acquire Bristol Water and the lower proportionate amount of debt arising from Bristol Water due to the Corporation's reduced ownership interest. 


The Corporation expects continuing stable performance from its portfolio of power generation and utilities businesses and a return to a lower effective gas transportation toll in 2013 to transport gas to Cardinal.  Adjusted EBITDA in 2013 is expected to be approximately $110 million to $120 million, which, while consistent with 2012 performance, represents an approximately $6 million increase in Adjusted EBITDA over 2012 on a pro forma basis had the Corporation held its 50% interest in Bristol Water for the full 2012 year.  The Corporation's 2013 outlook reflects the following assumptions:

•       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;

•       Increased business development activity compared with 2012, which is expected to result in higher corporate costs consistent with historical levels; and

•       Modest overhead costs related to power development activities.

The Corporation's strategic priorities for 2013 include:

Securing a new power purchase agreement for Cardinal. 

The Corporation remains in discussions with the Ontario Power Authority (“OPA”) to achieve a fair outcome on Cardinal that recognizes the value of the facility and its industrial, economic, social and community importance. 

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.

Pursuing new investment opportunities.

With a stronger balance sheet, the Corporation is actively identifying growth opportunities, primarily concentrating its business development efforts on Canada, the United States, the United Kingdom and western Europe, 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 for the quarter ending March 31, 2013 on the Corporation’s outstanding common shares. The dividend will be payable on April 30, 2013 to shareholders of record at the close of business on March 28, 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 April 30, 2013 to shareholders of record at the close of business on April 15, 2013.  The dividend on the Preferred Shares covers the period from February 1, 2013 to April 30, 2013.

In respect of the Corporation’s April 30, 2013 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 April 30, 2013 to holders of record on March 28, 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 Corporation’s Dividend Reinvestment Plan (“DRIP”) at  

Fiscal 2012 Results Conference Call and Webcast

The Corporation will hold a conference call and webcast (with accompanying slides) on Friday, March 8, 2013 at 8:30 a.m. EST to discuss fiscal 2012 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 March 22, 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 Corporation’s website at

About Capstone Infrastructure Corporation

Capstone Infrastructure Corporation’s 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 Corporation’s 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 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”, “estimate”, “plan”, “believe” or other similar words, and include, among other things, statements found in “Strategic Overview” and “Results of Operations”. 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, 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 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 the 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 $1.76 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 facilities, equipment or contractual arrangements, no material changes in the legislative, regulatory and operating framework for the Corporation's businesses, no delays in obtaining required approvals, no material changes in rate orders or rate structures for the power infrastructure facilities, Värmevärden or Bristol Water, no material changes in environmental regulations for the 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 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 for various reasons, including risks related to: the Corporation (variability of payments of dividends on common shares, which are not guaranteed; volatile market price for the Corporation's securities; availability of debt and equity financing; default under credit agreements and debt instruments; 2016 debentures credit risk, prior ranking indebtedness and absence of covenant protection; geographic concentration; foreign exchange; acquisitions; derivatives; environmental, health and safety; changes in legislation and administrative policy; insurance; reliance on key personnel; and shareholder dilution); the power infrastructure facilities (operational performance; PPAs; fuel costs and supply; contract performance; land tenure and related rights; environmental; and regulatory environment); Bristol Water (Ofwat price determinations; failure to deliver capital investment programs; failure to deliver water leakage target; SIM and the serviceability assessment; economic conditions; pension plan obligations; regulatory environment; operational performance; competition; seasonality and climate change; and labour relations); and Värmevärden (general risks inherent in the district heating sector; 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 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.