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Atlantic Power Corporation Releases Third Quarter 2016 Results and Narrows 2016 Guidance Range
Source: PR Newswire (Canada)
DEDHAM, Mass., Nov. 7, 2016 /CNW/ -- Atlantic Power Corporation (NYSE: AT) (TSX: ATP) ("Atlantic Power" or the "Company") today reported cash provided by operating activities of $38.2 million for the third quarter of 2016, an increase of $23.9 million from the year-ago period primarily due to lower cash interest payments (resulting from debt repayment) and favorable changes in working capital.
Third Quarter 2016 Financial Results (and Comparison to Third Quarter 2015)
Cash provided by operating activities of $38.2 million vs. $14.3 million
Net loss of $(82.4) million, including $84.7 million non-cash impairment charge, vs. $(6.0) million
Project loss of $(57.1) million including impairment charge vs. project income of $24.2 million
Project Adjusted EBITDA of $51.3 million vs. $56.0 million
Other Highlights
Repaid $20 million of term loan ($45.1 million year to date, plus $25.3 million on previous term loan in first quarter)
Amortized $3.7 million of project debt ($8.0 million year to date)
Repurchased 3.7 million common shares (7.1 million in total under normal course issuer bid; total investment $17.3 million at an average price of $2.44)
Reduced 2016 estimated total overhead costs to $24 million from previous estimate of $27 million
The Company reported a net loss for the third quarter of 2016 of $(82.4) million, which included a non-cash impairment charge of $84.7 million, versus a net loss for the third quarter of 2015 of $(6.0) million. The increased net loss was primarily attributable to the impairment charge and a reduction in foreign exchange gain, partially offset by lower interest expense. Project loss for the third quarter of 2016 was $(57.1) million including the impairment charge versus project income for the year-ago period of $24.2 million. In addition to the impairment charge, the result also reflected a reduction in foreign exchange gain, partially offset by lower interest expense.
Project Adjusted EBITDA for the third quarter of 2016 was $51.3 million, a decline of $4.7 million from the year-ago period. The primary drivers were an extended planned outage at Morris and lower water flows at Curtis Palmer, partially offset by higher water flows at Mamquam and lower maintenance expense at Kapuskasing and North Bay.
"During the third quarter we continued to make significant progress in strengthening our balance sheet and improving our debt maturity profile, repaying nearly $24 million of term loan and project debt and repurchasing approximately $63 million of our June 2019 convertible debentures. Continued debt repayment should improve our leverage ratio of 5.8 times by more than a turn by the end of next year," said James J. Moore, Jr., President and CEO of Atlantic Power. "In addition, during the quarter we repurchased nearly 3.7 million common shares, for a total of 7.1 million repurchased under the normal course issuer bid implemented last December. The average repurchase price of $2.44 per share represents a significant discount to our estimate of intrinsic value. We currently have approximately $60 million of discretionary cash available for further debt and equity repurchases and internal or external growth investments, which we will continue to allocate to the highest-return uses."
"We continue to focus on cost and debt reduction as an important contributor to improved cash flow. Over the next four years we expect to amortize more than $400 million of our term loan and project debt, which will drive interest expense and leverage lower," continued Mr. Moore. "In addition, we now expect our overhead costs for 2016 to be approximately $24 million, more than 10% lower than our previous estimate, which was already 50% below the level of 2013. We plan to aggressively seek further cost reduction opportunities, with a major focus on operating costs in 2017."
Atlantic Power Corporation
Table 1 – Selected Results
(in millions of U.S. dollars, except as otherwise stated)
Unaudited
Three months ended
September 30,
Nine months ended
September 30,
2016
2015
2016
2015
Financial Results
Project revenue
$101.2
$107.5
$305.8
$321.8
Project (loss) income
(57.1)
24.2
(3.3)
63.0
Net (loss) income attributable to Atlantic Power Corporation
(82.4)
(6.0)
(116.2)
26.1
Cash provided by operating activities
38.2
14.3
91.9
67.7
Project Adjusted EBITDA
51.3
56.0
159.9
158.5
Cash Distributions from Projects
50.4
51.5
140.6
138.8
Operating Results
Aggregate power generation (thousands of Net MWh)
1,540.2
1,666.7
4,565.8
4,707.1
Weighted average availability
91.1%
96.2%
93.5%
94.9%
All amounts are in U.S. dollars and are approximate unless otherwise indicated. Project Adjusted EBITDA is not a recognized measure under generally accepted accounting principles in the United States ("GAAP") and does not have a standardized meaning prescribed by GAAP; therefore, this measure may not be comparable to similar measures presented by other companies. Please refer to "Non-GAAP Disclosures" beginning on page 15 of this news release for an explanation and a reconciliation of "Project Adjusted EBITDA" as used in this news release to project income (loss), the most directly comparable measure on a GAAP basis, and net income (loss). Cash Distributions from Projects is the amount of cash distributed by the projects to the Company out of available project cash flow after all project-level operating costs, interest payments, principal repayment, capital expenditures and working capital requirements. It is not a non-GAAP measure. Project Adjusted EBITDA, a non-GAAP measure, is the most comparable measure, but it is before debt service, capital expenditures and working capital requirements. The Company has included a bridge of Project Adjusted EBITDA to Cash Distributions from Projects in the "Non-GAAP Disclosures" section of this release.
The Wind Projects consisted of five operating wind projects in Idaho and Oklahoma and representing 521 MW net ownership: Goshen (12.5% economic interest), Idaho Wind (27.6% economic interest), Meadow Creek (100% economic interest), Rockland Wind Farm (50% economic interest, but consolidated on a 100% basis) and Canadian Hills (99% economic interest). The Wind Projects were sold in June 2015 and are included in discontinued operations for the three and nine months ended September 30, 2015. Results of the Wind Projects are excluded from Operating Results in Table 1 and as discussed below. Results of the Wind Projects are excluded from Project revenue, Project (loss) income, Project Adjusted EBITDA and Cash Distributions from Projects as shown in Table 1 and as discussed below but are included in Net (loss) income attributable to Atlantic Power Corporation and Cash provided by operating activities as shown in Table 1.
Operating Results
Three Months ended September 30, 2016
Project availability was 91.1% in the third quarter of 2016, a decrease from 96.2% in the year-ago period. Morris underwent an extensive overhaul in the third quarter and Calstock deferred its spring outage to the fall. The impact of these outages was partially offset by higher availability at Piedmont, which had fewer outages in the third quarter, and Mamquam, which had a planned outage in the third quarter of 2015.
Generation decreased 7.6% in the third quarter of 2016 from the year-ago period, primarily due to the Morris overhaul; Frederickson, which had lower dispatch, and lower generation at Curtis Palmer due to lower water flows. These decreases were partially offset by higher generation at Mamquam due to higher water flows in 2016 and a maintenance outage in the third quarter of 2015.
Nine Months ended September 30, 2016
Project availability was 93.5% in the first nine months of 2016, a decrease from 94.9% in the year-ago period. The Morris overhaul was the primary driver of the reduced availability. This was partially offset by higher availability at Mamquam, which had a planned outage in the third quarter of 2015, and Manchief, which had a major outage in the second quarter of 2015.
Generation decreased by 3.0% in the first nine months of 2016 from the year-ago period, primarily due to lower dispatch at Manchief and Selkirk and maintenance outages at Morris and Chambers. These decreases were partially offset by higher generation at Mamquam due to higher water flows in 2016 and a maintenance outage in the comparable 2015 period.
Income and Project Adjusted EBITDA
Three Months Ended September 30, 2016
Impairment
In the third quarter of 2016, as discussed in further detail in its report on Form 10-Q, the Company recorded a non-cash impairment charge of $84.7 million. Of the total, $78.8 million was for an impairment of goodwill at its Mamquam, Curtis Palmer, North Bay and Kapuskasing projects and the remainder was for an impairment of the carrying value of long-lived assets at its North Bay and Kapuskasing projects. As a result of these impairments, goodwill was reduced to $37.6 million at September 30, 2016.
The impairment resulted from an event-driven goodwill impairment test, which was undertaken because of a significant decline during the quarter in the long-term power price outlook provided by a third party and used by the Company in this analysis. Estimated future cash flows (beyond the expiration of the Power Purchase Agreement or PPA) are sensitive to forward power prices. Additionally, the approaching expiration dates of the North Bay and Kapuskasing PPAs were a factor in the impairment analysis.
Because the third-quarter test was event-driven, the Company is still required to conduct an annual impairment test, which it will do in the fourth quarter of 2016. As previously disclosed, the Company identified a material weakness with respect to its controls over impairment testing at the time the previous annual test was conducted. Management is actively engaged in remediating this weakness, and has re-designed certain controls and implemented new controls as part of this process. The Company expects to remediate this weakness by the time its year end 2016 financial statements are filed on Form 10-K.
Net income (loss)
The Company reported a net loss of $(82.4) million versus a net loss of $(6.0) million in the third quarter of 2015. The year-over-year decrease was mostly attributable to an $84.7 million impairment charge recorded in the 2016 period as described above and an $18.3 million decrease in a largely unrealized foreign exchange gain relative to 2015. These negative factors were partially offset by lower interest expense in 2016, which was attributable to debt repayment in 2015 and 2016 and to the non-recurrence of $19.5 million of interest and redemption costs associated with the July 2015 redemption of the Company's 9.0% Senior Unsecured Notes (the "9.0% Notes").
Project income (loss) and Project Adjusted EBITDA
Table 2 provides a breakdown of Project income and Project Adjusted EBITDA by segment for the three and nine months ended September 30, 2016 as compared to the same periods in 2015. An explanation of these two metrics can be found in the Note to Table 2. Results for project income and Project Adjusted EBITDA exclude discontinued operations; accordingly, results of the Wind Projects, which were sold in June 2015, are not included in either metric for the periods shown in Table 2.
Project loss for the third quarter of 2016 was $(57.1) million versus project income of $24.2 million for the year-ago period. The primary reason for the change from project income to project loss was the $84.7 million impairment recorded in the third quarter of 2016. Another factor was the reduction in foreign exchange gain from $21.7 million in 2015 to $3.4 million in 2016. These negative factors were partially offset by increased income attributable to the fair value of derivatives and lower interest expense, in part because of the costs associated with the redemption of the 9.0% Notes in the third quarter of 2015.
Project Adjusted EBITDA decreased $4.7 million to $51.3 million for the third quarter of 2016. Morris had an $8.5 million reduction in Project Adjusted EBITDA, primarily attributable to higher maintenance expense and reduced gross margin due to a planned extended outage. Lower water flows at Curtis Palmer and expiration of a rate adder at Calstock also contributed to the decrease. These factors were partially offset by higher water flows at Mamquam, lower maintenance expense at Kapuskasing and North Bay, and increases at other projects.
Atlantic Power Corporation
Table 2 – Segment Results
(in millions of U.S. dollars, except as otherwise stated)
Unaudited
Three months ended September 30,
Nine months ended September 30,
2016
2015
2016
2015
Project income (loss)
East U.S.
($8.6)
$12.4
$16.9
$40.0
West U.S.
11.4
11.5
13.8
7.3
Canada
(62.4)
1.9
(33.1)
17.9
Un-allocated Corporate
2.5
(1.6)
(0.9)
(2.2)
Total
($57.1)
$24.2
($3.3)
$63.0
Project Adjusted EBITDA
East U.S.
$19.4
$27.4
$70.5
$81.0
West U.S.
21.3
21.4
43.4
37.1
Canada
10.7
7.6
46.2
43.0
Un-allocated Corporate
(0.1)
(0.4)
(0.2)
(2.6)
Total
$51.3
$56.0
$159.9
$158.5
Note: The results of the Wind Projects are included in discontinued operations and are excluded from Project income and Project Adjusted EBITDA as presented in Table 2.
Project income (loss) is a GAAP measure that can fluctuate significantly due to non-cash adjustments to "mark-to-market" the fair value of derivatives. Non-cash impairment charges and gains or losses on the sale of assets are included in project income and can also affect year-over-year comparisons.
Project Adjusted EBITDA is a non-GAAP measure. Management believes that Project Adjusted EBITDA, which includes the proportional share of Project Adjusted EBITDA from the Company's equity method projects, is a more useful measure of financial results at its projects because it excludes non-cash impairment charges, gains or losses on the sale of assets and non-cash mark-to-market adjustments, all of which can affect year-to-year comparisons. Project Adjusted EBITDA is before corporate overhead expense. The most directly comparable GAAP measure to Project Adjusted EBITDA is Project income; Tables 10A through 10D of this release provide a reconciliation of Net income to Project income and to Project Adjusted EBITDA by segment and on a consolidated basis for the three- and nine-month periods ended September 30, 2016 and September 30, 2015.
Corporate-level general and administrative (G&A) expense (shown as "Administration" on the Consolidated Statements of Operations) decreased $1.2 million in the third quarter of 2016 to $5.7 million. The improvement was primarily due to decreases in professional services expenses, compensation costs and rent expenses.
Nine Months Ended September 30, 2016
Net income (loss)
The Company had a net loss of $(116.2) million for the first nine months of 2016 versus net income of $26.1 million for the comparable 2015 period. The 2016 result included the $84.7 million impairment charge recorded in the third quarter and a $31.5 million non-cash write-off of deferred financing costs in the second quarter. The 2015 result included $20.6 million of net income from discontinued operations (Wind business) and an $11.0 million loss attributable to noncontrolling interests (Wind). The benefit of lower corporate G&A and lower interest expense in 2016 was more than offset by a largely unrealized foreign exchange loss of $19.1 million versus a foreign exchange gain in 2015.
Project income (loss) and Project Adjusted EBITDA
Project loss of $3.3 million for the first nine months of 2016 compared unfavorably to project income of $63.0 million for the 2015 period. The 2016 result included the impairment charge previously described. Excluding the impairment charge, project income increased $18.4 million from the year-ago period, primarily due to a favorable change in the fair value of derivative instruments, lower depreciation expense following an impairment of long-lived assets in the fourth quarter of 2015, and higher project income at Manchief, which had a scheduled maintenance overhaul in the second quarter of 2015, partially offset by lower project income at Morris, which had an extended planned outage in the third quarter of 2016.
Project Adjusted EBITDA of $159.9 million for the first nine months of 2016 increased $1.4 million from $158.5 million for the 2015 period. Lower maintenance expense and higher revenue at Manchief, which had an outage in 2015, and higher water flows at Mamquam were partially offset by higher maintenance expense and lower revenues at Morris due to the extended outage in 2016 and by gas turbine maintenance expense and lower steam demand at Kenilworth.
Corporate-level G&A expense of $17.6 million for the first nine months of 2016 was $5.4 million lower than the year-ago period primarily due to a $2.3 million reduction in employee compensation expense, a $1.6 million decrease in professional services costs and a $1.4 million decrease in rent expense.
Cash Flow
Table 3 presents cash flow results for the Company for the three and nine months ended September 30, 2016 as compared to the same periods in 2015.
Atlantic Power Corporation
Table 3 – Cash Flow Results
(in millions of U.S. dollars, except as otherwise stated)
Unaudited
Three months ended September 30,
Nine months ended September 30,
2016
2015
2016
2015
Cash Provided by Operating Activities
$38.2
$14.3
$91.9
$67.7
Amount attributable to Discontinued Operations (Wind Projects) included above
-
-
-
21.9
Cash Distributions from Projects (excludes
Discontinued Operations) (1)
50.4
51.5
140.6
138.8
(1) There were no cash distributions from the Wind Projects for the three months ended September 30, 2016 and 2015. Excludes cash distributions from the Wind Projects of $0 and $9.3 million for the nine months ended September 30, 2016 and 2015, respectively.
Three Months Ended September 30, 2016
Cash provided by operating activities (a GAAP measure) increased $23.9 million to $38.2 million from $14.3 million in the third quarter of 2015. The increase was primarily attributable to a $20.6 million reduction in cash interest payments due to debt repayment in 2016 and 2015 and make-whole payments associated with the redemption of the 9.0% Notes in 2015.
Changes in other operating balances (such as receivables, payables and certain other assets and liabilities) were a positive $17.5 million versus $7.6 million in the year-ago period, or a $9.9 million benefit to cash flow in 2016 as compared to 2015. The positive impact of lower cash interest payments and the favorable change in other operating balances was partially offset by lower Project Adjusted EBITDA ($4.7 million).
During the quarter, the Company used operating cash flow to repay term loan debt of $20 million and project debt of $3.7 million, make capital expenditures of $4.5 million and pay preferred dividends of $2.2 million. In the third quarter of 2015, repayment of the term loan was $9.7 million, project debt repayment was $4.4 million, capital expenditures were $4.4 million and preferred dividends were $2.1 million.
Cash Distributions from Projects is the amount of cash distributed by the projects to the Company out of available project cash flow after all project-level operating costs, interest payments, principal repayment, capital expenditures and working capital requirements. In the third quarter of 2016, Cash Distributions from Projects decreased $1.1 million to $50.4 million from $51.5 million for the same period in 2015. The decrease was primarily due to Curtis Palmer, which experienced lower water flows, and Morris, which underwent an extensive overhaul in the third quarter of 2016. These decreases were partially offset by increases at Manchief, Kapuskasing and Nipigon because of major maintenance/optimization events in the third quarter of 2015 that did not recur in the third quarter of 2016.
Nine Months Ended September 30, 2016
Cash provided by operating activities increased $24.2 million in the first nine months of 2016 to $91.9 million from $67.7 million in the year-ago period. The 2015 result included $21.9 million of operating cash flow from the Wind business. Excluding this discontinued operation, operating cash flow increased approximately $46 million. The increase was primarily attributable to a reduction of $32.2 million in cash interest payments (of which $1.5 million was attributable to the Wind business) due to debt repayment in 2015 and 2016 and the absence of make-whole premiums associated with the redemption of the 9.0% Notes in 2015. Lower corporate G&A expense of $5.4 million was also a positive factor.
Changes in other operating balances in the first nine months of 2016 were $53.6 million versus $24.4 million in the comparable period in 2015. The 2016 result included $31.5 million for the write-off of deferred financing costs in the second quarter, which was included in net income (loss) but did not affect cash flow, and the 2015 figure included $3.2 million related to the Wind business. Excluding these items, changes in other operating balances were approximately $22 million in 2016 and $21 million in 2015, or a $1 million benefit to cash flow in 2016 as compared to 2015.
In the first nine months of 2016, the Company used operating cash flow to repay term loan debt of $70.5 million (including $25.3 million related to the previous term loan in the first quarter) and project debt of $8.0 million, make capital expenditures of $6.5 million and pay preferred dividends of $6.4 million. In the first nine months of 2015, repayment of the term loan was $56.5 million, project debt repayments totaled $10.8 million, capital expenditures were $9.4 million and preferred dividends were $6.7 million.
Cash Distributions from Projects increased $1.8 million to $140.6 million for the first nine months of 2016 from $138.8 million for the same period in 2015. The increase was due to Manchief, which underwent a gas turbine major overhaul last year; Morris, which received a reimbursement for a customer-owned construction project this year; and Mamquam, which benefited from higher water flows. These increases were partially offset by Chambers, which under the new project debt agreement in 2014 made a nine-month distribution in January 2015 versus a six-month distribution in January 2016.
Results of Discontinued Operations
The Wind projects, which were sold in June 2015, had no impact on financial results in 2016. For the first nine months of 2015, the Wind projects had Project income of $53.2 million, Cash provided by operating activities of $21.9 million and Cash Distributions of $9.3 million, as shown in Table 4.
Atlantic Power Corporation
Table 4 – Discontinued Operations
(in millions of U.S. dollars, except as otherwise stated)
Unaudited
Three months ended September 30,
Nine months ended September 30,
2016
2015
2016
2015
Project revenue
$-
$-
$-
$34.8
Project income (loss)
-
(0.2)
-
53.2
Net (loss) income
-
(0.5)
-
20.6
Cash provided by operating activities
-
-
-
21.9
Cash Distributions from Projects
-
-
-
9.3
Liquidity and Recent Balance Sheet Initiatives
Balance Sheet
Substantial Issuer Bid for 2019 Convertible Debentures
As previously reported, in July 2016, the Company repurchased and canceled $62.7 million of its Series C Convertible Debentures under a substantial issuer bid. The price was $965 per $1,000 of principal amount, plus accrued and unpaid interest. At September 30, 2016, there were approximately $42.6 million of Series C Convertible Debentures outstanding.
Mandatory Debt Repayment
During the third quarter of 2016, the Company amortized $20 million of the APLP Holdings term loan and $3.7 million of project-level debt. Year to date, the Company has amortized $70.5 million of term loan debt, including $25.3 million in the first quarter related to the previous term loan, and $8.0 million of project-level debt. The Company expects to repay another $15 million of term loan and $2.9 million of project-level debt in the fourth quarter of 2016.
Normal Course Issuer Bid (Discretionary repurchases)
Convertible debentures: In the first quarter of 2016, the Company repurchased $18.8 million principal amount of convertible debentures under the normal course issuer bid (NCIB). The remaining 2017 convertible debentures were redeemed in May using net proceeds from the term loan refinancing. The Company did not make any additional repurchases of convertible debentures under the NCIB in the second or third quarters of 2016 because it had already reached the maximum amounts of repurchases of 2019 convertible debentures allowable under the NCIB ($11.7 million for the Series C and Cdn$9.0 million for the Series D).
Common shares: The Company repurchased slightly less than 3.7 million common shares in the third quarter at a cost of approximately $9.1 million. During the fourth quarter to date, the Company has repurchased another 1.4 million common shares. Since the NCIB was implemented in December, the Company has repurchased a total of 7.1 million common shares at a total cost of approximately $17.3 million (average price of $2.44 per share).
The NCIB is scheduled to expire on December 28, 2016.
Debt Balance and Leverage at September 30, 2016
Although the refinancing of the previous term loan in April 2016 resulted in a net increase in debt of $252 million, the allocation of a majority of the net cash proceeds from the refinancing to debt redemptions and repurchases in the second and third quarters of this year, together with ongoing amortization of the new term loan and project debt, have offset the majority of this increase. At September 30, 2016, the Company's consolidated debt was $1.02 billion, excluding unamortized discounts and deferred financing costs, as compared to $993 million prior to the refinancing. The Company's leverage ratio (consolidated gross debt to trailing 12-month consolidated Adjusted EBITDA) was 5.8 times at September 30, 2016. The Company expects this ratio to decline to 5.6 times by the end of 2016.
Debt Maturity Profile
As a result of refinancing and discretionary repurchases to date, the Company has no bullet maturities at the corporate level prior to June 2019, when the remaining $42.6 million of Series C convertible debentures will mature. In addition, the Company has $61.7 million (U.S. dollar equivalent) of Series D convertible debentures maturing in December 2019. The reshaping of the Company's maturity profile is further improved by the later maturity dates for the new term loan (2023 versus 2021 previously) and the new revolver (2021 versus 2018 previously). The Company also has one project debt bullet maturity during this period – the term loan at its Piedmont project totaling $54 million at its maturity date of August 2018. In addition to these bullet maturities, the Company has amortizing debt at various projects through 2025 and required amortization of the APLP Holdings term loan per a targeted debt schedule through the 2023 maturity date.
Liquidity
As shown in Table 5, the Company's liquidity at September 30, 2016 was $205.1 million, including $93.8 million of unrestricted cash and $111.3 million of borrowing capacity under its corporate revolver. Liquidity at June 30, 2016 was $251.4 million, including $154.2 million of unrestricted cash and $97.2 million of borrowing capacity. Borrowing capacity increased $13.9 million because of a reduction in letters of credit outstanding. The cash balance decreased approximately $60 million during the quarter, as the Company used $61 million of cash to repurchase $62.7 million of its Series C Convertible Debentures at a price of 96.5%. The Company also repurchased $9.1 million of common shares. Operating cash flow exceeded debt repayment, capital expenditures and preferred dividend payments for the quarter by approximately $8 million.
Atlantic Power Corporation
Table 5 – Liquidity (in millions of U.S. dollars)
Unaudited
June 30, 2016
September 30,
2016
Revolver capacity
$200.0
$200.0
Letters of credit outstanding
(102.8)
(88.7)
Unused borrowing capacity
97.2
111.3
Unrestricted cash
154.2
93.8
Total Liquidity
$251.4
$205.1
Note: Liquidity numbers presented do not include restricted cash of $14.3 million at June 30, 2016 and $12.6 million at September 30, 2016.
Other Financial Updates
2016 Guidance
The Company has not provided guidance for Project income or Net income because of the difficulty of making accurate forecasts and projections without unreasonable efforts with respect to certain highly variable components of these comparable GAAP metrics, including changes in the fair value of derivative instruments and foreign exchange gains or losses. These factors, which generally do not affect cash flow, are not included in Project Adjusted EBITDA.
Based on the results of the nine months ended September 30, 2016 and the outlook for the fourth quarter of 2016, the Company is narrowing its range for 2016 Project Adjusted EBITDA guidance to between $205 and $215 million, from the previous range of $200 to $220 million.
Table 6 provides a bridge of the Company's 2016 Project Adjusted EBITDA guidance to Cash provided by operating activities. For purposes of providing this bridge to a cash flow measure, the impact of changes in working capital is assumed to be nil.
Atlantic Power Corporation
Table 6 – Bridge of 2016 Project Adjusted EBITDA Guidance to Cash Provided by Operating Activities
(in millions of U.S. dollars)
Unaudited
2016 Project Adjusted EBITDA Guidance(1)
$205 - $215
Adjustment for equity method projects(2)
(2)
Corporate G&A expense
(23)
Cash interest payments
(73)
Cash taxes
(4)
Other
-
Cash provided by operating activities
$100 - $115
Note: For the purpose of providing a bridge of Project Adjusted EBITDA guidance to a cash flow measure, the impact of changes in working capital on Cash provided by operating activities is assumed to be nil.
(1) Initially provided March 7, 2016 and revised November 7, 2016.
(2) For equity method projects, represents difference between Project Adjusted EBITDA and cash distribution from equity method projects.
Optimization Investments
The Company expects to make approximately $3.5 million of optimization-related investments in its projects in 2016, with the majority of those for upgrades to a boiler and two combustion turbines at Morris and a spillway upgrade project at Curtis Palmer. The Morris turbine upgrades were completed in September during the extended outage. Work on the boiler upgrade has been completed and final testing is expected to be completed by the end of November. The Curtis Palmer project was completed in November.
The Company expects to realize a cash flow benefit of approximately $8 million in 2016 from investments made in 2013 through 2016 totaling approximately $25 million. This is lower than the original expectation primarily because higher levels of waste heat at Nipigon have reduced the need for the duct burners and booster pump that were installed as optimization projects in 2014 and 2015, respectively. The cash flow benefit of additional waste heat has more than offset the lower return from optimization. In addition, low water flows at Curtis Palmer this year have reduced the contribution from the turbine upgrades completed in 2013 and 2014.
Maintenance and Capex
Through the first nine months of 2016, the Company has made $6.5 million of capital expenditures and incurred $36.8 million of maintenance expense. For the full year, the Company expects to make capital expenditures of $8 million (including $3.5 million for optimization projects) and incur maintenance expense in 2016 of approximately $47 million. Both the capex and maintenance expenditures forecasts include the Company's share of projects in which it has an equity ownership interest.
The capital expenditure forecast does not include any outlays for converting Tunis to simple cycle operation (in conjunction with the new Power Purchase Agreement), as there has not yet been a decision with respect to the start date for the new PPA, or for a new fuel shredder at Williams Lake, which would accommodate rail ties as part of the project's fuel supply. In September, the Company received an amended air permit for Williams Lake that would allow increased use of rail ties, but the permit has been appealed. Investment in the shredder is contingent on resolution of the appeal as well as on an agreement with BC Hydro on a long-term extension of the existing PPA, which is scheduled to expire in March 2018.
Supplementary Financial Information
For a discussion of non-GAAP disclosures and schedules reconciling the Company's non-GAAP measure to the comparable GAAP measure, please refer to pages 15-21 of this release. Included in this section is a summary of Project income and Project Adjusted EBITDA by project for the three and nine months ended September 30, 2016 and 2015 (Tables 12 and 13, respectively).
Investor Conference Call and Webcast
Atlantic Power's management team will host a telephone conference call on Tuesday, November 8, 2016 at 8:30 AM ET. An accompanying slide presentation will be available on the Company's website prior to the call.
Conference Call / Webcast Information:
Date: Tuesday, November 8, 2016
Start Time: 8:30 AM ET
Phone Number: U.S. (Toll Free) 1-855-239-3193; Canada (Toll Free) 1-855-669-9657; International (Toll) 1-412-542-4129
Conference Access: Please request access to the Atlantic Power conference call.
Webcast: The call will be broadcast over Atlantic Power's website at www.atlanticpower.com.
Replay/Archive Information:
Replay: Access conference call number 10094170 at the following telephone numbers: U.S. (Toll Free) 1-877-344-7529; Canada (Toll Free) 1-855-669-9658; International (Toll) 1-412-317-0088. The replay will be available one hour after the end of the conference call through December 8, 2016 at 11:59 PM ET.
Webcast archive: The conference call will be archived on Atlantic Power's website at www.atlanticpower.com for a period of 12 months.
About Atlantic Power
Atlantic Power owns and operates a diverse fleet of power generation assets in the United States and Canada. The Company's power generation projects sell electricity to utilities and other large commercial customers largely under long-term power purchase agreements, which seek to minimize exposure to changes in commodity prices. Atlantic Power's power generation projects in operation have an aggregate gross electric generation capacity of approximately 2,138 megawatts ("MW") in which its aggregate ownership interest is approximately 1,500 MW. The Company's current portfolio consists of interests in twenty-three operational power generation projects across nine states in the United States and two provinces in Canada.
Atlantic Power's shares trade on the New York Stock Exchange under the symbol AT and on the Toronto Stock Exchange under the symbol ATP. For more information, please visit the Company's website at www.atlanticpower.com or contact:
Atlantic Power Corporation
Investor Relations
(617) 977-2700
info@atlanticpower.com
Copies of the Company's financial data and other publicly filed documents are available on SEDAR at www.sedar.com or on EDGAR at www.sec.gov/edgar.shtml under "Atlantic Power Corporation" or on the Company's website.
************************************************************************************************************************
Cautionary Note Regarding Forward-Looking Statements
To the extent any statements made in this news release contain information that is not historical, these statements are forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, and under Canadian securities law (collectively, "forward-looking statements").
Certain statements in this news release may constitute "forward-looking statements", which reflect the expectations of management regarding the future growth, results of operations, performance and business prospects and opportunities of the Company and its projects. These statements, which are based on certain assumptions and describe the Company's future plans, strategies and expectations, can generally be identified by the use of the words "may," "will," "project," "continue," "believe," "intend," "anticipate," "expect" or similar expressions that are predictions of or indicate future events or trends and which do not relate solely to present or historical matters. Examples of such statements in this press release include, but are not limited, to statements with respect to the following:
The Company's expectation that its leverage ratio will decline from 5.8 times currently to 5.6 times by year end 2016;
the Company's expectation that it will improve its leverage ratio of 5.8 times currently by more than a turn by year end 2017;
the Company's belief that the average repurchase price of $2.44 per share represents a compelling discount to the Company's estimate of intrinsic value;
the Company's estimate of discretionary cash (approximately $60 million) and its ability to allocate that cash to the highest-return uses;
the Company's estimate that it will amortize more than $400 million of term loan and project debt over the next four years;
the Company's estimate that overhead costs will total approximately $24 million in 2016, down from the previous expectation of approximately $27 million;
the Company's plan to seek further cost reductions in 2017, with a focus on plant operating costs;
the Company's estimates of factors affecting its goodwill impairment analysis;
the Company's views that it will remediate the material weakness in its financial controls (with respect to impairment) by the time it files its 2016 report on Form 10-K;
the Company's expectation that it will repay $15 million of term loan debt and $2.9 million of project debt in the fourth quarter of 2016;
the Company's views of its debt maturity profile;
the Company's expectation that discretionary optimization investments in its fleet will be approximately $3.5 million in 2016, and that the majority of those investments will be made at the Morris and Curtis Palmer projects;
the timing of the completion of upgrades at the Morris and Curtis Palmer projects;
the Company's expectation that it will realize a cash flow benefit of approximately $8 million in 2016 from discretionary investments made in 2013 through 2016 totaling approximately $25 million;
the Company's expectation that in 2016, capital expenditures will total approximately $8 million and maintenance expense will total approximately $47 million;
timing of capital expenditures for a new fuel shredder at Williams Lake and the timing and probability of resolution of the appeal of an amended air permit and contract extension with BC Hydro;
the Company's estimation that 2016 Project Adjusted EBITDA will be in the range of $205 to $215 million; and
the results of operations and performance of the Company's projects, business prospects, opportunities and future growth of the Company will be as described herein.
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 or the times at or by which such performance or results will be achieved. Please refer to the factors discussed under "Risk Factors" and "Forward-Looking Information" in the Company's periodic reports as filed with the Securities and Exchange Commission from time to time for a detailed discussion of the risks and uncertainties affecting the Company, including, without limitation, the outcome or impact of the Company's business plan, including the objective of enhancing the value of its existing assets through optimization investments and commercial activities, delevering its balance sheet to improve its cost of capital and ability to compete for new investments, and utilizing its core competencies to create proprietary investment opportunities, and the Company's ability to raise additional capital for growth and/or debt reduction, and the outcome or impact on the Company's business of any such actions. Although the forward-looking statements contained in this news release are based upon what are believed to be reasonable assumptions, investors cannot be assured that actual results will be consistent with these forward-looking statements, and the differences may be material. These forward-looking statements are made as of the date of this news release and, except as expressly required by applicable law, the Company assumes no obligation to update or revise them to reflect new events or circumstances. The Company's ability to achieve its longer-term goals, including those described in this news release, is based on significant assumptions relating to and including, among other things, the general conditions of the markets in which it operates, revenues, internal and external growth opportunities, its ability to sell assets at favorable prices or at all and general financial market and interest rate conditions. The Company's actual results may differ, possibly materially and adversely, from these goals.
Table 7 – Consolidated Balance Sheet (in millions of U.S. dollars)
(Unaudited)
September 30,
December 31,
2016
2015
Assets
Current assets:
Cash and cash equivalents
$93.8
$72.4
Restricted cash
12.6
15.2
Accounts receivable
39.5
39.6
Inventory
1.6
-
Prepayments and other current assets
15.9
16.9
Assets held for sale
10.1
8.3
Other current assets
2.5
4.5
Total current assets
176.0
156.9
Property, plant and equipment, net
749.8
777.7
Equity investments in unconsolidated affiliates
277.6
286.2
Power purchase agreements and intangible assets, net
273.0
308.9
Goodwill
37.6
134.5
Derivative instruments asset
1.3
0.3
Deferred income tax
1.0
-
Other assets
5.6
6.7
Total assets
$1,521.9
$1,671.2
Liabilities
Current liabilities:
Accounts payable
$3.7
$6.9
Accrued interest
10.9
1.6
Other accrued liabilities
24.3
25.4
Current portion of long-term debt
101.4
15.8
Current portion of derivative instruments liability
15.2
36.7
Other current liabilities
4.1
2.5
Total current liabilities
159.6
88.9
Long-term debt
778.9
682.7
Convertible debentures
101.4
277.7
Derivative instruments liability
27.3
20.8
Deferred income taxes
69.8
85.7
Power purchase and fuel supply agreement liabilities, net
26.2
27.0
Other long-term liabilities
54.9
53.2
Total liabilities
$1,218.1
$1,236.0
Equity
Common shares, no par value, unlimited authorized shares; 117,029,308 and 122,153,082 issued and outstanding at September 30, 2016 and December 31, 2015, respectively
1,278.1
1,290.6
Accumulated other comprehensive loss
(142.0)
(139.3)
Retained deficit
(1,053.6)
(937.4)
Total Atlantic Power Corporation shareholders' equity
82.5
213.9
Preferred shares issued by a subsidiary company
221.3
221.3
Total equity
303.8
435.2
Total liabilities and equity
$1,521.9
$1,671.2
Atlantic Power Corporation
Table 8 – Consolidated Statements of Operations
(in millions of U.S. dollars, except per share amounts)
Unaudited
Three months ended
September 30,
Nine months ended
September 30,
2016
2015
2016
2015
Project revenue:
Energy sales
$40.7
$43.4
$138.4
$144.9
Energy capacity revenue
44.0
45.9
113.2
117.4
Other
16.5
18.2
54.2
59.5
101.2
107.5
305.8
321.8
Project expenses:
Fuel
36.8
41.1
110.8
125.3
Operations and maintenance
28.2
24.8
79.4
81.6
Development
-
-
-
1.1
Depreciation and amortization
25.3
27.8
75.6
83.8
90.3
93.7
265.8
291.8
Project other income (expense):
Change in fair value of derivative instruments
9.0
3.6
20.0
8.7
Equity in earnings of unconsolidated affiliates
9.6
8.9
27.9
28.3
Interest, net
(2.4)
(2.1)
(6.9)
(6.2)
Impairment
(84.7)
-
(84.7)
-
Other income, net
0.5
-
0.4
2.2
(68.0)
10.4
(43.3)
33.0
Project income
(57.1)
24.2
(3.3)
63.0
Administrative and other expenses (income):
Administration
5.7
6.9
17.6
23.0
Interest, net
20.0
41.0
87.9
91.3
Foreign exchange loss (gain)
(3.4)
(21.7)
19.1
(49.1)
Other income, net
(1.7)
-
(3.9)
(3.1)
20.6
26.2
120.7
62.1
(Loss) income from continuing operations before income taxes
(77.7)
(2.0)
(124.0)
0.9
Income tax (benefit) expense
2.6
1.4
(14.2)
(0.3)
(Loss) income from continuing operations
(80.3)
(3.4)
(109.8)
1.2
Net income from discontinued operations, net of tax (1)
-
(0.5)
-
20.6
Net (loss) income
(80.3)
(3.9)
(109.8)
21.8
Net (loss) attributable to noncontrolling interests
-
-
-
(11.0)
Net income attributable to preferred share dividends of a subsidiary company
2.1
2.1
6.4
6.7
Net (loss) income attributable to Atlantic Power Corporation
($82.4)
($6.0)
($116.2)
$26.1
Basic and diluted earnings per share:
(Loss) from continuing operations attributable to Atlantic Power Corporation
($0.69)
($0.05)
($0.96)
($0.05)
Income from discontinued operations, net of tax
-
-
-
0.26
Net (loss) income attributable to Atlantic Power Corporation
($0.69)
($0.05)
($0.96)
$0.21
Weighted average number of common shares outstanding:
Basic
119.3
122.1
120.9
121.8
Diluted
119.3
122.2
120.9
121.9
Dividends paid per common share:
$-
$0.02
$-
$0.07
(1) Includes contributions from the Wind Projects, which are components of discontinued operations.
Atlantic Power Corporation
Table 9 – Consolidated Statements of Cash Flows (in millions of U.S. dollars)
Unaudited
Nine months ended September 30,
2016
2015
Cash provided by operating activities:
Net (loss) income
($109.8)
$21.8
Adjustments to reconcile to net cash provided by operating activities:
Depreciation and amortization
75.6
94.1
Gain from discontinued operations
-
(47.2)
Gain on sale of development project and other assets
-
(2.3)
Gain on purchase and cancellation of convertible debentures
(4.7)
(3.1)
Loss on disposal of fixed assets
0.2
-
Stock-based compensation expense
1.4
2.1
Long-lived assets and goodwill impairment
84.7
-
Equity in earnings from unconsolidated affiliates
(27.9)
(28.3)
Distributions from unconsolidated affiliates
36.5
40.0
Unrealized foreign exchange gain
19.1
(49.3)
Change in fair value of derivative instruments
(20.0)
(8.0)
Change in deferred income taxes
(16.8)
23.6
Change in other operating balances
Accounts receivable
-
4.3
Inventory
1.1
1.7
Prepayments and other assets
42.1
20.2
Accounts payable
0.3
(6.1)
Accruals and other liabilities
10.1
4.2
Cash provided by operating activities
91.9
67.7
Cash provided by investing activities:
Change in restricted cash
2.6
8.0
Proceeds from sale of assets and equity investments, net
-
326.3
Contribution to unconsolidated affiliate
-
(0.5)
Capitalized development costs
-
(0.8)
Reimbursement of construction cost
4.7
-
Purchase of property, plant and equipment
(6.5)
(9.4)
Cash provided by investing activities
0.8
323.6
Cash used in financing activities:
Proceeds from senior secured term loan facility, net of discount
679.0
-
Common share repurchases
(13.9)
-
Repayment of corporate and project-level debt
(526.4)
(387.1)
Repayment of convertible debentures
(187.4)
(18.7)
Deferred financing costs
(16.2)
-
Dividends paid to common shareholders
-
(8.5)
Dividends paid to noncontrolling interests
-
(3.8)
Dividends paid to preferred shareholders
(6.4)
(6.7)
Cash used in financing activities
(71.3)
(424.8)
Net increase in cash and cash equivalents
21.4
(33.5)
Less cash at discontinued operations
-
3.9
Cash and cash equivalents at beginning of period at discontinued operations
-
-
Cash and cash equivalents at beginning of period
72.4
106.0
Cash and cash equivalents at end of period
$93.8
$76.4
Supplemental cash flow information
Interest paid
$43.3
$75.5
Income taxes paid, net
2.8
4.1
Accruals for construction in progress
0.4
1.2
Non-GAAP Disclosures
Project Adjusted EBITDA is not a measure recognized under GAAP and does not have a standardized meaning prescribed by GAAP, and is therefore unlikely to be comparable to similar measures presented by other companies. Investors are cautioned that the Company may calculate this non-GAAP measure in a manner that is different from other companies. The most directly comparable GAAP measure is Project income (loss). Project Adjusted EBITDA is defined as project income (loss) plus interest, taxes, depreciation and amortization (including non-cash impairment charges) and changes in the fair value of derivative instruments. Management uses Project Adjusted EBITDA at the project level to provide comparative information about project performance and believes such information is helpful to investors. A reconciliation of Project Adjusted EBITDA to Project income (loss) and to Net income (loss) by segment and on a consolidated basis is provided in Tables 10A through 10D on pages 16 and 17 of this news release.
Cash Distributions from Projects is the amount of cash distributed by the projects to the Company out of available project cash flow after all project-level operating costs, interest payments, principal repayment, capital expenditures and working capital requirements. It is not a non-GAAP measure. Project Adjusted EBITDA, a non-GAAP measure, is the most comparable measure, but it is before debt service, capital expenditures and working capital requirements. The Company has provided a bridge of Project Adjusted EBITDA to Cash Distributions from Projects in Tables 11A through 11D on pages 18 and 19 of this release.
Table 12 (page 20) presents Project income (loss) by project for selected projects for the three and nine months ended September 30, 2016 and the comparable periods in 2015. Table 13 (page 21) presents Project Adjusted EBITDA by project for the same projects as shown in Table 12 for the three and nine months ended September 30, 2016 and the comparable periods in 2015. Table 13 also provides a reconciliation of Project Adjusted EBITDA to Net Income (loss) for the three- and nine-month periods ended September 30, 2016 and September 30, 2015.
Atlantic Power Corporation
Table 10A – Reconciliation of Net income (loss) to Project Adjusted EBITDA by Segment and Consolidated (in millions of U.S. dollars)
Three Months Ended September 30, 2016
Unaudited
East
West
Canada
Un-alloc.
Corp
Consol.
Net (loss) income attributable to Atlantic Power Corporation
($8.6)
$11.4
($62.4)
($22.8)
($82.4)
Net income attributable to preferred share dividends of a subsidiary company
-
-
-
2.1
2.1
Net (loss) attributable to noncontrolling interests
-
-
-
-
-
Net (loss) income
(8.6)
11.4
(62.4)
(20.7)
(80.3)
Net income from discontinued operations, net of tax
-
-
-
-
-
Net income (loss) from continuing operations
(8.6)
11.4
(62.4)
(20.7)
(80.3)
Income tax (benefit) expense
-
-
-
2.6
2.6
Income (loss) from continuing operations before income taxes
(8.6)
11.4
(62.4)
(18.1)
(77.7)
Administration
-
-
-
5.7
5.7
Interest, net
-
-
-
20.0
20.0
Foreign exchange loss (gain)
-
-
-
(3.4)
(3.4)
Other income, net
-
-
-
(1.7)
(1.7)
Project income (loss)
(8.6)
11.4
(62.4)
2.5
(57.1)
Change in fair value of derivative instruments
(1.2)
-
(5.6)
(2.2)
(9.0)
Depreciation and amortization
11.0
9.9
9.4
0.1
30.4
Interest, net
2.8
-
-
-
2.8
Impairment
15.4
-
69.3
-
84.7
Other project expense
-
-
-
(0.5)
(0.5)
Project Adjusted EBITDA
$19.4
$21.3
$10.7
($0.1)
$51.3
Atlantic Power Corporation
Table 10B – Reconciliation of Net income (loss) to Project Adjusted EBITDA by Segment and Consolidated (in millions of U.S. dollars)
Three Months Ended September 30, 2015
Unaudited
East
West
Canada
Un-alloc.
Corp
Consol.
Net (loss) income attributable to Atlantic Power Corporation
$12.4
$11.5
$1.9
($31.8)
($6.0)
Net income attributable to preferred share dividends of a subsidiary company
-
-
-
2.1
2.1
Net (loss) attributable to noncontrolling interests
-
-
-
-
-
Net (loss) income
12.4
11.5
1.9
(29.7)
(3.9)
Net income from discontinued operations, net of tax
-
-
-
0.5
0.5
Net income (loss) from continuing operations
12.4
11.5
1.9
(29.2)
(3.4)
Income tax (benefit) expense
-
-
-
1.4
1.4
Income (loss) from continuing operations before income taxes
12.4
11.5
1.9
(27.8)
(2.0)
Administration
-
-
-
6.9
6.9
Interest, net
-
-
-
41.0
41.0
Foreign exchange loss (gain)
-
-
-
(21.7)
(21.7)
Other income, net
-
-
-
-
-
Project income (loss)
12.4
11.5
1.9
(1.6)
24.2
Change in fair value of derivative instruments
1.9
-
(6.1)
0.6
(3.6)
Depreciation and amortization
10.7
9.9
11.7
0.5
32.8
Interest, net
2.4
-
0.1
-
2.5
Other project expense
-
-
-
0.1
0.1
Project Adjusted EBITDA
$27.4
$21.4
$7.6
($0.4)
$56.0
Atlantic Power Corporation
Table 10C – Reconciliation of Net income (loss) to Project Adjusted EBITDA by Segment and Consolidated (in millions of U.S. dollars)
Nine Months Ended September 30, 2016
Unaudited
East
West
Canada
Un-alloc.
Corp
Consol.
Net (loss) income attributable to Atlantic Power Corporation
$16.9
$13.8
($33.1)
($113.8)
($116.2)
Net income attributable to preferred share dividends of a subsidiary company
-
-
-
6.4
6.4
Net (loss) attributable to noncontrolling interests
-
-
-
-
-
Net (loss) income
16.9
13.8
(33.1)
(107.4)
(109.8)
Net income from discontinued operations, net of tax
-
-
-
-
-
Net income (loss) from continuing operations
16.9
13.8
(33.1)
(107.4)
(109.8)
Income tax (benefit) expense
-
-
-
(14.2)
(14.2)
Income (loss) from continuing operations before income taxes
16.9
13.8
(33.1)
(121.6)
(124.0)
Administration
-
-
-
17.6
17.6
Interest, net
-
-
-
87.9
87.9
Foreign exchange loss (gain)
-
-
-
19.1
19.1
Other income, net
-
-
-
(3.9)
(3.9)
Project income (loss)
16.9
13.8
(33.1)
(0.9)
(3.3)
Change in fair value of derivative instruments
(3.0)
-
(17.7)
0.6
(20.1)
Depreciation and amortization
33.0
29.6
27.7
0.5
90.8
Interest, net
8.2
-
-
-
8.2
Impairment
15.4
-
69.3
-
84.7
Other project expense
-
-
-
(0.4)
(0.4)
Project Adjusted EBITDA
$70.5
$43.4
$46.2
($0.2)
$159.9
Atlantic Power Corporation
Table 10D – Reconciliation of Net income (loss) to Project Adjusted EBITDA by Segment and Consolidated (in millions of U.S. dollars)
Nine Months Ended September 30, 2015
Unaudited
East
West
Canada
Un-alloc.
Corp
Consol.
Net (loss) income attributable to Atlantic Power Corporation
$40.0
$7.3
$17.9
($39.1)
$26.1
Net income attributable to preferred share dividends of a subsidiary company
-
-
-
6.7
6.7
Net (loss) attributable to noncontrolling interests
-
-
-
(11.0)
(11.0)
Net (loss) income
40.0
7.3
17.9
(43.4)
21.8
Net income from discontinued operations, net of tax
-
-
-
(20.6)
(20.6)
Net income (loss) from continuing operations
40.0
7.3
17.9
(64.0)
1.2
Income tax (benefit) expense
-
-
-
(0.3)
(0.3)
Income (loss) from continuing operations before income taxes
40.0
7.3
17.9
(64.3)
0.9
Administration
-
-
-
23.0
23.0
Interest, net
-
-
-
91.3
91.3
Foreign exchange loss (gain)
-
-
-
(49.1)
(49.1)
Other income, net
-
-
-
(3.1)
(3.1)
Project income (loss)
40.0
7.3
17.9
(2.2)
63.0
Change in fair value of derivative instruments
1.6
-
(11.6)
1.3
(8.7)
Depreciation and amortization
31.8
29.7
36.5
0.9
98.9
Interest, net
7.6
-
0.1
-
7.7
Other project expense
-
0.1
0.1
(2.6)
(2.4)
Project Adjusted EBITDA
$81.0
$37.1
$43.0
($2.6)
$158.5
Atlantic Power Corporation
Table 11A – Cash Distributions from Projects (by Segment, in millions of U.S. dollars)
Three months ended September 30, 2016
Unaudited
Segment
Project
Adjusted
EBITDA
Repayment
of long-
term debt
Interest
expense,
net
Capital
expenditures
Other, including
changes in
working capital
Cash
Distributions
from Projects
East U.S.
Consolidated
$8.2
($3.7)
($2.0)
($3.6)
$2.8
$1.7
Equity method
11.2
-
(0.4)
(0.1)
2.8
13.5
Total
19.4
(3.7)
(2.4)
(3.7)
5.6
15.2
West U.S.
Consolidated
18.1
-
-
-
(2.2)
15.9
Equity method
3.2
-
-
-
0.8
4.0
Total
21.3
-
-
-
(1.4)
19.9
Canada
Consolidated
10.7
(0.0)
(0.0)
(0.2)
4.9
15.4
Equity method
-
-
-
-
-
-
Total
10.7
(0.0)
(0.0)
(0.2)
4.9
15.4
Total consolidated
37.0
(3.7)
(2.0)
(3.7)
5.4
33.0
Total equity method
14.4
-
(0.4)
(0.1)
3.6
17.5
Un-allocated
corporate
(0.1)
-
-
(0.0)
0.1
(0.1)
Total
$51.3
($3.7)
($2.4)
($3.9)
$9.1
$50.4
Atlantic Power Corporation
Table 11B – Cash Distributions from Projects (by Segment, in millions of U.S. dollars)
Three months ended September 30, 2015
Unaudited
Segment
Project
Adjusted
EBITDA
Repayment
of long-
term debt
Interest
expense,
net
Capital
expenditures
Other, including
changes in
working capital
Cash
Distributions
from Projects
East U.S.
Consolidated
$17.8
($4.3)
($1.7)
($3.2)
($1.6)
$7.0
Equity method
9.6
-
(0.5)
(0.1)
5.1
14.1
Total
27.4
(4.3)
(2.1)
(3.3)
3.4
21.1
West U.S.
Consolidated
18.1
-
-
(0.6)
(3.3)
14.2
Equity method
3.3
-
-
-
0.7
4.0
Total
21.4
-
-
(0.6)
(2.6)
18.2
Canada
Consolidated
7.6
(0.1)
(0.0)
(1.6)
6.2
12.1
Equity method
-
-
-
-
-
-
Total
7.6
(0.1)
(0.0)
(1.6)
6.2
12.1
Total consolidated
43.5
(4.4)
(1.7)
(5.4)
1.3
33.3
Total equity method
12.9
-
(0.5)
(0.1)
5.8
18.1
Un-allocated corporate
(0.4)
-
-
0.3
0.2
0.1
Total
$56.0
($4.4)
($2.1)
($5.2)
$7.3
$51.5
Atlantic Power Corporation
Table 11C – Cash Distributions from Projects (by Segment, in millions of U.S. dollars)
Nine months ended September 30, 2016
Unaudited
Segment
Project
Adjusted
EBITDA
Repayment
of long-
term debt
Interest
expense,
net
Capital
expenditures
Other, including
changes in
working capital
Cash
Distributions
from Projects
East U.S.
Consolidated
$39.8
($7.9)
($5.4)
($0.7)
$2.2
$27.9
Equity method
30.8
-
(1.2)
(0.2)
(2.0)
27.4
Total
70.5
(7.9)
(6.7)
(0.9)
0.3
55.3
West U.S.
Consolidated
33.8
-
-
0.0
(5.2)
28.7
Equity method
9.6
-
-
-
1.4
11.0
Total
43.4
-
-
0.0
(3.8)
39.6
Canada
Consolidated
46.2
(0.1)
(0.0)
(0.7)
0.3
45.7
Equity method
-
-
-
-
-
-
Total
46.2
(0.1)
(0.0)
(0.7)
0.3
45.7
Total consolidated
119.8
(8.0)
(5.5)
(1.4)
(2.6)
102.2
Total equity method
40.4
-
(1.2)
(0.2)
(0.6)
38.4
Un-allocated corporate
(0.2)
-
-
0.3
(0.0)
(0.0)
Total
$159.9
($8.0)
($6.7)
($1.4)
($3.3)
$140.6
Atlantic Power Corporation
Table 11D – Cash Distributions from Projects (by Segment, in millions of U.S. dollars)
Nine months ended September 30, 2015
Unaudited
Segment
Project
Adjusted
EBITDA
Repayment
of long-
term debt
Interest
expense,
net
Capital
expenditures
Other, including
changes in
working capital
Cash
Distributions
from Projects
East U.S.
Consolidated
$50.4
($10.6)
($5.0)
($7.2)
($1.8)
$25.7
Equity method
30.6
-
(1.4)
(0.2)
3.6
32.7
Total
81.0
(10.6)
(6.4)
(7.4)
1.8
58.4
West U.S.
Consolidated
27.3
-
-
(0.6)
(4.0)
22.7
Equity method
9.7
-
-
-
0.9
10.6
Total
37.1
-
-
(0.6)
(3.2)
33.3
Canada
Consolidated
43.0
(0.2)
(0.0)
(2.5)
6.9
47.2
Equity method
-
-
-
-
-
-
Total
43.0
(0.2)
(0.0)
(2.5)
6.9
47.2
Total consolidated
120.8
(10.8)
(5.1)
(10.4)
1.0
95.6
Total equity method
40.3
-
(1.4)
(0.2)
4.5
43.2
Un-allocated corporate
(2.6)
-
-
0.2
2.3
(0.1)
Total
$158.5
($10.8)
($6.5)
($10.3)
$7.8
$138.8
Atlantic Power Corporation
Table 12 – Project Income by Project (for Selected Projects)
(in millions of U.S. dollars)
Unaudited
Three months ended
September 30,
Nine months ended
September 30,
Segment / Project
Accounting
2016
2015
2016
2015
East U.S.
Cadillac
Consolidated
$0.9
$0.2
$2.5
$1.8
Curtis Palmer
Consolidated
(16.0)
1.4
(6.3)
9.2
Morris
Consolidated
(5.1)
3.6
(0.7)
10.4
Piedmont
Consolidated
3.0
0.5
(5.4)
(4.3)
Kenilworth
Consolidated
0.3
0.1
(0.7)
0.5
Chambers
Equity method
1.4
1.4
4.6
5.2
Orlando
Equity method
6.4
5.0
23.0
16.9
Selkirk
Equity method
0.5
0.2
(0.1)
0.3
Total
(8.6)
12.4
16.9
40.0
West U.S.
Manchief
Consolidated
0.6
1.0
1.6
(5.9)
Naval Station
Consolidated
3.0
2.7
3.5
4.1
North Island
Consolidated
2.3
2.3
3.6
3.7
Naval Training Center
Consolidated
1.4
1.4
1.8
1.9
Oxnard
Consolidated
3.4
3.4
1.4
1.5
Frederickson
Equity method
0.9
0.7
1.4
1.8
Koma Kulshan
Equity method
(0.2)
-
0.5
0.2
Total
11.4
11.5
13.8
7.3
Canada
Calstock
Consolidated
0.7
1.7
4.7
5.3
Kapuskasing
Consolidated
(6.5)
0.5
(0.6)
5.2
Mamquam
Consolidated
(50.1)
(1.3)
(44.2)
1.5
Nipigon
Consolidated
0.4
1.6
4.5
3.6
North Bay
Consolidated
(9.0)
(0.3)
(2.3)
4.7
Williams Lake
Consolidated
2.8
0.4
5.6
(1.6)
Other (Tunis and Moresby Lake)
Consolidated
(0.7)
(0.7)
(0.8)
(0.8)
Total
(62.4)
1.9
(33.1)
17.9
Totals
Consolidated projects
(68.6)
18.5
(31.8)
40.8
Equity method projects
9.0
7.3
29.4
24.4
Un-allocated corporate
2.5
(1.6)
(0.9)
(2.2)
Total Project Income
($57.1)
$24.2
($3.3)
$63.0
Atlantic Power Corporation
Table 13 – Project Adjusted EBITDA by Project (for Selected Projects) (in millions of U.S. dollars), Unaudited
Three months ended
September 30,
Nine months ended
September 30,
Segment / Project
Accounting
2016
2015
2016
2015
East U.S.
Cadillac
Consolidated
$2.3
$1.6
$6.7
$6.1
Curtis Palmer
Consolidated
3.3
5.4
20.7
20.9
Morris
Consolidated
(4.0)
4.5
3.9
13.3
Piedmont
Consolidated
5.7
5.6
7.3
7.8
Kenilworth
Consolidated
0.9
0.8
1.2
2.4
Chambers
Equity method
4.1
4.0
13.0
13.6
Orlando
Equity method
6.6
5.4
17.8
16.7
Selkirk
Equity method
0.5
0.2
(0.1)
0.3
Total
19.4
27.4
70.5
81.0
West U.S.
Manchief
Consolidated
3.4
3.8
10.0
2.4
Naval Station
Consolidated
4.6
4.3
8.3
8.9
North Island
Consolidated
3.4
3.3
6.8
7.0
Naval Training Center
Consolidated
2.2
2.2
4.2
4.3
Oxnard
Consolidated
4.5
4.5
4.6
4.8
Frederickson
Equity method
3.3
3.2
8.8
9.2
Koma Kulshan
Equity method
(0.1)
0.1
0.8
0.5
Total
21.3
21.4
43.4
37.1
Canada
Calstock
Consolidated
1.1
2.3
6.2
7.0
Kapuskasing
Consolidated
1.0
(0.3)
4.1
4.1
Mamquam
Consolidated
0.6
(0.9)
7.2
2.7
Nipigon
Consolidated
3.6
3.3
13.2
13.2
North Bay
Consolidated
(0.2)
(1.2)
3.7
3.6
Williams Lake
Consolidated
5.0
4.9
11.9
12.5
Other (Tunis and Moresby Lake)
Consolidated
(0.4)
(0.5)
(0.1)
(0.1)
Total
10.7
7.6
46.2
43.0
Totals
Consolidated projects
37.0
43.5
119.8
120.8
Equity method projects
14.4
12.9
40.4
40.3
Un-allocated corporate
(0.1)
(0.4)
(0.2)
(2.6)
Total Project Adjusted EBITDA
$51.3
$56.0
$159.9
$158.5
Other project expense
($0.5)
$0.1
($0.4)
($2.4)
Impairment
84.7
-
84.7
-
Interest, net
2.8
2.5
8.2
7.7
Depreciation and amortization
30.4
32.8
90.8
98.9
Change in fair value of derivative instruments
(9.0)
(3.6)
(20.1)
(8.7)
Project income
($57.1)
$24.2
($3.3)
$63.0
Other income, net
(1.7)
-
(3.9)
(3.1)
Foreign exchange loss (gain)
(3.4)
(21.7)
19.1
(49.1)
Interest, net
20.0
41.0
87.9
91.3
Administration
5.7
6.9
17.6
23.0
(Loss) from continuing operations before income taxes
(77.7)
(2.0)
(124.0)
0.9
Income tax (benefit) expense
2.6
1.4
(14.2)
(0.3)
Net (loss) income from continuing operations
(80.3)
(3.4)
(109.8)
1.2
Net income from discontinued operations, net of tax
-
0.5
-
(20.6)
Net (loss) income
(80.3)
(3.9)
(109.8)
21.8
Net (loss) attributable to noncontrolling interests
-
-
-
(11.0)
Net income attributable to preferred share dividends of a subsidiary company
2.1
2.1
6.4
6.7
Net (loss) income attributable to Atlantic Power Corporation
($82.4)
($6.0)
($116.2)
$26.1
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/atlantic-power-corporation-releases-third-quarter-2016-results-and-narrows-2016-guidance-range-300358711.html
SOURCE Atlantic Power Corporation
Copyright 2016 Canada NewsWire
GSE Shareholder Fairholme Describes Maximum Delay Discovery Rigmarole $FNMA
http://www.seekingalpha.com/article/4019618
Republic Airways Announces RJET Cadet Flight Time Initiative (FTI); Program Covers Up to 100 Hours of Flight Training Time
Font size: A | A | A
10:31 AM ET 11/1/16 | BusinessWire
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12:47 PM ET 11/1/16
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Republic Airways Holdings Inc. (OTC: RJETQ) is proud to announce the RJET Cadet Flight Time Initiative (FTI), an innovative new program that covers the financial cost of up to 100 final hours of flight time for prospective pilots to obtain their ATP certificate. The program, believed to be a first among U.S. regional air passenger carriers, is designed to combat the industry's continuing pilot shortage while securing a clear pathway for prospective professional aviators to join Republic Airways.
This Smart News Release features multimedia. View the full release here: http://www.businesswire.com/news/home/20161101006139/en/
"Republic continually encounters Pilots slow to achieve their final flight hour requirements because of the cost and the general pressures of daily life," said Jody Scott, Director of Talent Acquisition for Republic. "This program removes those barriers, providing a practical solution that will reduce months of effort and expense to finally achieve their career goal of flying for an airline. We want that airline to be Republic Airways."
The first FTI group began training in September, and a second group began October 17.
The genesis for the RJET Cadet FTI came from those directly affected by today's flight hour requirements - interns working at Republic. Through discussions among Company leaders and interns, it became clear that while the internship program provided invaluable career experience, achieving necessary flight time (especially multi-engine time) actually is the biggest challenge facing aspiring aviators. Republic's leadership wanted to change that, and the FTI is the end result.
"Republic is a Company that acts and listens, and this proactive, forward-thinking program is proof of that," said Shuttle America Capt. Nick Hammond, one of the key Associates leading the development of the FTI. "And, quite frankly, the response has been incredible. We look forward to making such an important impact on these new aviators and helping jump-start their careers, and welcoming them into the Republic family."
Fast facts about the FTI:
-- The program is open to pilots with a commercial airline certificate, with Republic funding the final 100 hours of total flight time or remaining multi-engine time necessary to meet ATP or R-ATP minimums.
-- Flight hours are provided by a Republic-designated flight school.
-- Transportation and lodging during the FTI is provided by Republic.
-- Participants accept a sign-on agreement with Republic, which includes a conditional offer of employment upon completion of FTI flight hours (up to 100).
"Republic Airways is fully vested in developing safe aviators, and this is a tremendous and unique opportunity to do just that," Scott said.
About the Company: Republic Airways Holdings Inc. (OTC: RJETQ), based in Indianapolis, Indiana, is an airline holding company that owns Republic Airlines and Shuttle America, collectively called "the airlines." The airlines operate a combined fleet of about 185 aircraft and offer scheduled passenger service with approximately 850 flights daily to about 105 cities in 38 U.S. states, Canada, the Caribbean and Latin America. The airlines provide fixed-fee flights operated under our major airline partner brands of American Eagle, Delta Connection and United Express. The airlines currently employ about 5,200 aviation professionals. For more information, visit www.rjet.com, follow @RepublicAirways on Twitter and Instagram or connect on Facebook or LinkedIn. More FTI information is available at http://www.rjet.com/en/FTI.aspx.
http://cts.businesswire.com/ct/CT?id=bwnews&sty=20161101006139r1&sid=cmtx6&distro=nx&lang=en
View source version on businesswire.com: http://www.businesswire.com/news/home/20161101006139/en/
SOURCE: Republic Airways Holdings Inc."> <Property FormalName="PrimaryTwitterHandle" Value="@republicairways
Republic Airways Holdings
Bob Birge, 317-471-2470
Director, Corporate Communications
CorpComm@rjet.com
Republic Airways Reaches Aircraft Deals
Font size: A | A | A
3:02 PM ET 10/28/16 | Dow Jones
By Lillian Rizzo
Republic Airways Holdings Inc. has reached a handful of aircraft-related deals in connection with its chapter 11 restructuring.
Court papers show the company is asking the U.S. Bankruptcy Court in Manhattan to sign off on settlements and an aircraft sale as it continues to work on a plan to restructure its debts and exit chapter 11 protection.
Under one deal, Aerolitoral SA, which does business as Aeromexico Connect, would buy the three aircraft it has been leasing from a Republic subsidiary.
Republic would then use the sale proceeds, the amount of which it didn't disclose, to pay down debt that had been secured by the aircraft.
The hope is to complete the sale by Dec. 31, court papers show.
In connection with the sale, Aeromexico agreed to a settlement of more than $12 million in claims it said it was owed by Republic on prior aircraft leases. Under the settlement, Aeromexico Connect would get a $6.8 million general unsecured claim against one Republic affiliate and a $3.5 million claim against another.
The airliner also said in court papers it has reached a settlement with Bombardier Inc. "after lengthy and difficult arm's-length negotiations," which reduced the millions of dollars Bombardier said it was owed to about $2 million, or "only a fraction of the amount asserted."
The company will bring all of these matters for the approval Judge Sean Lane of the U.S. Bankruptcy Court in New York on Nov. 17 for approval.
Settlements have been an integral part of Republic's chapter 11 case. The company has reached code-share agreements and settlements with United Continental Holdings Inc., Delta Air Lines Inc. and American Airlines Group Inc. since seeking bankruptcy protection in March.
The Indianapolis-based company filed for bankruptcy after facing challenges such as a U.S. pilot shortage that made it difficult to meet obligations in its code-share agreements. Through code-share agreements, Republic operates flights for Delta, United, American and other large carriers.
As part of Republic's long-term deal and code-share agreement with Delta, it also received a $75 million bankruptcy financing package.
Write to Lillian Rizzo at Lillian.Rizzo@wsj.com
> Dow Jones Newswires
October 28, 2016 15:02 ET (19:02 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Good Job To PricewaterhouseCoopers And FHFA For Settling GSE Lawsuit $FNMA
http://www.seekingalpha.com/article/4017473
Freddie Mac's And Fannie Mae's Shareholders Say: 'Long Live The U.S. King!' $FNMA
http://www.seekingalpha.com/article/4017487
The Past, Present And Future Of Fannie And Freddie: Financial Crisis, Appeals And Restructured Future $FNMA
http://www.seekingalpha.com/article/4017290
What Dividend Investors Need To Know About AT&T's Time Warner Acquisition $T
http://www.seekingalpha.com/article/4016634
Department Of Justice Petition For Secrecy Hurts GSE Shareholders $FNMA
http://www.seekingalpha.com/article/4016244
I sure hope that's the case!
Sirius XM turns 3.5% lower after in-line earnings, new dividend
http://www.seekingalpha.com/news/3217663
Sirius XM Declares Dividend, Boosts Share Buybacks by $2 Billion
Source: Dow Jones News
By Joshua Jamerson
Sirius XM Holdings Inc. initiated a quarterly dividend of a penny a share and boosted its share-buyback program by $2 billion on Thursday, as the satellite radio company said profit rose 17% in the latest period.
Shares rose 2.1% to $4.33 premarket.
In its third quarter, Sirius XM said it added 345,000 net new subscribers, ending the quarter with 31 million total subscribers. Its number of subscribers who don't get Sirius's service as part of a promotion, described as self-paying subscribers, rose 385,000 to 25.5 million.
The company's self-pay churn rate, or the rate at which its subscribers left the service, was unchanged from a year ago at 1.9%. Its average revenue per user rose 3% to $13.04, which the company said was its highest ever.
Sirius XM's profit rose to $193.9 million from $166.5 million a year ago. On a per-share basis, earnings rose to 4 cents from 3 cents a share. Revenue grew 9.2% to $1.28 billion.
Analysts polled by Thomson Reuters had forecast 4 cents in per-share earnings on $1.23 billion in revenue.
The additional $2 billion in share repurchases will bring Sirius's total buyback authorization to $10 billion.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
October 27, 2016 08:23 ET (12:23 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Sirius XM Declares Dividend, Boosts Buybacks
Source: Dow Jones News
Sirius XM Holdings Inc. initiated a quarterly dividend of a penny a share and boosted its share-buyback program by $2 billion on Thursday, as the satellite radio company said profit rose 17% in the latest period.
Shares rose 2.1% to $4.33 premarket.
In its third quarter, Sirius XM said it added 345,000 net new subscribers, ending the quarter with 31 million total subscribers. Its number of subscribers who don't get Sirius's service as part of a promotion, described as self-paying subscribers, rose 385,000 to 25.5 million.
The company's self-pay churn rate, or the rate at which its subscribers left the service, was unchanged from a year ago at 1.9%. Its average revenue per user rose 3% to $13.04, which the company said was its highest ever.
Sirius XM's profit rose to $193.9 million from $166.5 million a year ago. On a per-share basis, earnings rose to 4 cents from 3 cents a share. Revenue grew 9.2% to $1.28 billion.
Analysts polled by Thomson Reuters had forecast 4 cents in per-share earnings on $1.23 billion in revenue.
The additional $2 billion in share repurchases will bring Sirius's total buyback authorization to $10 billion.
Write to Joshua Jamerson at joshua.jamerson@wsj.com
(END) Dow Jones Newswires
October 27, 2016 08:25 ET (12:25 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Fairholme Files Emergency Enforcement Motion Suggesting GSE Perry Ruling Imminent $FNMA
http://www.seekingalpha.com/article/4015634
Sirius XM EPS in-line, beats on revenue
http://www.seekingalpha.com/news/3217369
Sirius XM declares $0.01 dividend
http://www.seekingalpha.com/news/3217362
Sirius Shares Moving Higher In Anticipation Of New Records $SIRI
http://www.seekingalpha.com/article/4015493
A Boon For American Airlines Amid Changing Brazilian Laws $AAL
http://www.seekingalpha.com/article/4015154
FHFA's Emergency Motion To Compel Production Of GSE Settlement Agreement $FNMA
http://www.seekingalpha.com/article/4015082
Only Fools Rush In: AT&T Knocks Time Warner Up With Buyout Reports (Video) $T
http://www.seekingalpha.com/article/4014110
Looks like it actually came out yesterday.
AT&T declares $0.49 dividend
http://www.seekingalpha.com/news/3215822
No they reported Friday I believe.
AT&T: Beware Of Another Deal $T
http://www.seekingalpha.com/article/4014047
AT&T seals $85.4B deal for Time Warner
http://www.seekingalpha.com/news/3215814
AT&T Reaches Deal to Buy Time Warner for More Than $80 Billion
Source: Dow Jones News
By Thomas Gryta and Keach Hagey
AT&T Inc. has reached an agreement to buy Time Warner Inc. for between $105 and $110 a share, with a deal likely to be announced as soon as Saturday evening, according to people familiar with the plans.
The boards of the two companies are meeting on Saturday to approve the transaction, the people said. The deal is half cash and half stock, according to one of the people.
The acquisition is valued at more than $80 billion and pushes the carrier deeper into the traditional entertainment business at a time of stalled wireless growth. For Time Warner, the deal represents a victory for Chief Executive Jeff Bewkes, 64, who took some heat from investors for rebuffing a takeover bid two years ago from 21st Century Fox at $85 a share.
The pairing brings together AT&T's millions of wireless and pay-television subscribers with Time Warner's deep media lineup including networks such as CNN, TNT, the prized HBO channel and Warner Bros. film and TV studio.
A merger of the companies would be the most ambitious marriage of content and distribution in the media and telecom industries since Comcast Corp.'s purchase of NBCUniversal and would create a behemoth to rival that cable giant. A rigorous regulatory review is expected and the acquisition of Time Warner likely wouldn't close until late 2017, people close to the process said.
Regulators have indicated misgivings about the prior Comcast-NBCU deal -- in particular, whether obligations placed on Comcast were tough enough and enforceable -- so it is unclear if they will be willing to bless another such merger. At the very least, former regulatory officials say there could be significant conditions placed on the combination.
The transaction would be far and away the biggest media deal of recent years. Time Warner had a market capitalization of $68 billion before The Wall Street Journal reported on the advanced talks Friday, while AT&T's was $233 billion.
On Friday, Time Warner shares closed at $89.48, up 8%.
AT&T has been shifting its sights to media and video in recent years, diving deeper into television after its nearly $50 billion deal to acquire satellite television provider DirecTV last year. That made AT&T, which traces its roots to the old 'Ma Bell, the country's biggest pay television provider as well as its second-largest wireless operator.
Time Warner "is the last scaled content play that's acquirable," said Michael Nathanson, an analyst at MoffettNathanson, noting that the rest of the major media companies are either so valuable they would be difficult to acquire, like Walt Disney Co., or family controlled, like 21st Century Fox, CBS and Viacom. "HBO, Turner and Warner Bros. are really good assets for a future of nonlinear consumption."
Write to Thomas Gryta at thomas.gryta@wsj.com and Keach Hagey at keach.hagey@wsj.com
(END) Dow Jones Newswires
October 22, 2016 13:56 ET (17:56 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Reports: It's done; AT&T to buy Time Warner for $80B-plus
http://www.seekingalpha.com/news/3215810
Reuters: AT&T has deal in principle to buy Time Warner for $85B
http://www.seekingalpha.com/news/3215794
Time Warner +7.8%, halted on report AT&T deal could come this weekend (updated)
http://www.seekingalpha.com/news/3215704
American Airlines' (AAL) CEO Doug Parker on Q3 2016 Results - Earnings Call Transcript $AAL
http://www.seekingalpha.com/article/4013667
Bloomberg: Time Warner's Bewkes will sell to AT&T in merger talks if price is right
http://www.seekingalpha.com/news/3215424
Already doubled down at .70! Looking to add if she drops another .05 -.10
RJETQ
Time Warner +7%, AT&T -2.2% on report AT&T considered taking over TWX
http://www.seekingalpha.com/news/3215408
American Airlines Group Reports Third Quarter Profit
Source: GlobeNewswire Inc.
American Airlines Group Inc. (NASDAQ:AAL) today reported its third quarter 2016 results. The Company’s third quarter highlights include:
Third quarter 2016 pre-tax profit of $1.2 billion, or $1.5 billion excluding special charges, and net profit of $737 million, or $933 million excluding special charges
Third quarter 2016 earnings per diluted share was $1.40 versus $2.49 for the same period last year. Third quarter 2016 adjusted1 earnings per diluted share was $2.80 versus $2.77 for the third quarter 2015
As part of its profit sharing plan, the Company accrued $86 million in the third quarter. This brings the year-to-date accrual for profit sharing to $257 million
Returned $669 million to stockholders through share repurchases and dividends in the third quarter
Successfully completed the Company’s largest IT cutover since the merger with no disruption to service
The Company reported a Generally Accepted Accounting Principles (GAAP) net profit of $737 million, or $1.40 per diluted share in the third quarter 2016. This compares to a GAAP net profit of $1.7 billion in the third quarter 2015, or $2.49 per diluted share. As a result of the reversal of the valuation allowance on the Company’s deferred tax assets as of December 31, 2015, the Company’s 2016 results include a $452 million provision for income taxes at an effective rate of approximately 38 percent, of which $449 million is non-cash due to net operating loss utilization. There was no tax provision for federal income taxes recorded in 2015.
The impact of the year-over-year change in non-cash income tax expense is removed by comparing pre-tax income. The Company reported a third quarter 2016 GAAP pre-tax income of $1.2 billion, and pre-tax income excluding net special charges of $1.5 billion. This compares to a third quarter 2015 GAAP pre-tax income of $1.7 billion, and pre-tax income excluding net special charges of $1.9 billion.
Adjusted1 third quarter 2016 earnings per diluted share was $2.80, up from $2.77 per diluted share in the third quarter of 2015.
“These outstanding results are due to the efforts of our more than 100,000 team members, who are working tirelessly to improve our operations, product, and customer experience,” said Doug Parker, Chairman and CEO. “Nowhere are these efforts more evident than through the seamless completion of our largest IT cutover yet, which combined our fleet and pilot groups onto one system, with no disruption to service. We’re already seeing the benefits as this cutover enables us to schedule our pilots and aircraft as one airline and allows us to further optimize our network to better meet the needs of our passengers.”
“With integration successes like this behind us, we are even more excited about the future. We are investing in our people and our product and are well along the path to restoring American as the greatest airline in the world.”
Third Quarter 2016 Highlights
GAAP Non-GAAP
3Q16 3Q15 3Q16 3Q15
Total operating revenues ($ mil) $ 10,594 $ 10,706 $ 10,594 $ 10,706
Total operating expenses ($ mil) 9,163 8,707 8,869 8,542
Operating income 1,431 1,999 1,725 2,164
Pre-tax income ($ mil) 1,189 1,709 1,483 1,895
Pre-tax margin 11.2 % 16.0 % 14.0 % 17.7 %
Net income ($ mil) 737 1,693 933 1,885
Earnings per diluted share $ 1.40 $ 2.49 $ 1.76 $ 2.77
Adjusted 1 earnings per diluted share n/a n/a $ 2.80 $ 2.77
Revenue and Cost Comparisons
Total revenue in the third quarter was $10.6 billion, a decrease of 1.1 percent versus the third quarter 2015 on a 1.2 percent increase in total available seat miles (ASMs). Total revenue per ASM was 14.73 cents, down 2.2 percent versus the third quarter 2015. This decrease was due to competitive capacity growth, continued macroeconomic softness outside of the United States, and foreign currency weakness.
Total operating expenses in the third quarter were $9.2 billion, up 5.2 percent compared to the third quarter 2015, due primarily to a 15.3 percent increase in salaries and benefits expense, which includes the impact of the Company’s recent labor agreements and an $86 million accrual for the Company’s profit sharing program.
Third quarter mainline cost per available seat mile (CASM) was 11.96 cents, up 5.6 percent on a 0.5 percent increase in mainline ASMs versus the third quarter 2015. Excluding fuel and special charges, mainline CASM was 9.32 cents, up 8.9 percent versus the third quarter 2015. Regional CASM was 18.85 cents, down 5.2 percent versus the third quarter 2015 on a 6.9 percent increase in regional ASMs. Excluding fuel and special charges, regional CASM was 15.08 cents, down 4.5 percent versus the third quarter 2015.
Fleet
As part of the Company’s ongoing fleet renewal program, the Company invested $1.0 billion in new aircraft during the third quarter, including 12 new mainline aircraft and 9 new regional aircraft, while removing 49 aircraft from the fleet. With an average mainline aircraft age of 10 years, the Company operates the youngest fleet of the four largest U.S. carriers.
Liquidity and Capital Return Program
As of September 30, 2016, the Company had approximately $9.2 billion in total available liquidity, consisting of unrestricted cash and short-term investments of $6.8 billion and $2.4 billion in undrawn revolver capacity. The Company also had restricted cash of $635 million.
The Company returned $669 million to its stockholders in the third quarter through the payment of $53 million in quarterly dividends and the repurchase of $616 million of common stock, or 18.2 million shares, at an average price of $33.87 per share. The Company has returned more than $9.0 billion to stockholders through share repurchases and dividends since mid-2014.
Share repurchases under the buyback programs may be made through a variety of methods, which may include open market purchases, privately negotiated transactions, block trades or accelerated share repurchase transactions. Any such repurchases will be made from time to time subject to market and economic conditions, applicable legal requirements and other relevant factors. The programs do not obligate the Company to repurchase any specific number of shares or continue a dividend for any fixed period, and may be suspended at any time at the Company's discretion.
The Company also declared a dividend of $0.10 per share to be paid on November 21, 2016, to stockholders of record as of November 7, 2016.
Notable Accomplishments
Integration Accomplishments
On Oct. 1, the Company smoothly integrated all 15,000 American Airlines pilots and its mainline fleet into a single scheduling system, a crucial step in unlocking the full potential of the Company’s network and airline. The successful completion of this company-wide project allows the Company to schedule pilots and aircraft seamlessly regardless of which pre-merger airline they came from. It will also allow pilots to receive the full benefits of their single seniority list and joint collective bargaining agreement
Reached an agreement with the TWU-IAM Association for pay increases for mechanics, fleet service and other employees while negotiations continue for a full joint collective bargaining agreement. In September, the Company and the TWU-IAM Association reached a tentative agreement on a new joint collective bargaining agreement for flight simulator engineers
Debuted new uniforms for 80,000 flight crew members, mechanics, and employees at airports, clubs and lounges
In October, reached an industry-leading tentative agreement with the Transport Workers Union for a new joint collective bargaining agreement covering flight crew training instructors and simulator instructors
Finance, Marketing, and Network Accomplishments
Announced new agreements with partners Citi and Barclaycard US to extend their relationships, as well as a new, long-term exclusive agreement with MasterCard, to provide AAdvantage® miles and other benefits to customers
Took delivery of the Company’s first Boeing 787-9 aircraft, the first of four 787-9s expected to be delivered this year. These aircraft are the first at a U.S. airline to offer Premium Economy seating, a new class of service on international flights with more legroom and wider seats. International service on these aircraft begins Nov. 3 to Sao Paulo and on Nov. 4 to Madrid
Launched several financing transactions during the quarter, including the $814 million 2016-3 Enhanced Equipment Trust Certificates, which consists of both AA and A tranches, and re-priced the Company’s 2014 Credit Facilities, which reduced the interest rate by 25 basis points
Launched new nonstop service between Los Angeles International Airport and Hong Kong on Sept. 7
The U.S. Department of Transportation tentatively awarded American a slot pair for service between Los Angeles International Airport and Tokyo Haneda, allowing American to shift its service to more favorable daytime hours
Expanded complimentary in-flight entertainment offerings to include premium movies, TV shows, music and games in the Main Cabin on all domestic flights with seatback entertainment and wireless streaming entertainment, giving customers unrestricted access to the largest content library among the U.S. carriers from their seatback entertainment system or their own device
Began the Company’s first-ever regularly scheduled flights to Cuba on Sept. 7 with nonstop service from Miami to Cienfuegos and Holguin. Havana service begins in November
Reopened the Company’s London Heathrow Arrivals Lounge following a multi-million dollar refurbishment that radically changed the overall look and ambiance of the facility. The lounge now features 29 top-notch shower rooms, a business center and meeting room. The Company also re-opened its new Admirals Club lounge at Rio de Janeiro airport
Announced that the Company’s new campus would be named after former Chairman and CEO Robert Crandall
Community Relations Accomplishments
Received the top score of 100 on the 2016 Disability Equality Index® and was named a “2016 DEI Best Places to Work”
Participated in the “Stand Up To Cancer” telecast, which was broadcast live on all major networks and more than 50 cable channels. Funds raised during the broadcast will further groundbreaking research to turn more patients into survivors
Honored four employee recipients of the eighth annual Earl G. Graves Award for Leadership in Inclusion and Diversity
Announced a multi-year financial commitment of $1 million to the Answer ALS research project to help end amyotrophic lateral sclerosis
Brought 180 World War II, Korean and Vietnam War veterans from Asheville, N.C. to Washington D.C. to spend the day at the memorials to those wars. The flight marked both the 10th anniversary of American’s partnership with the Honor Flight Network and American’s 500th Honor Flight since the first one arrived in Washington in 2006
Launched a partnership with TurboVote, a non-partisan, nonprofit organization that assists in voter registration, to help its U.S. employees register to vote
Special Items
In the third quarter, the Company recognized $294 million in net special charges before the effect of income taxes, principally consisting of merger integration expenses relating to re-branding of aircraft, airport facilities and uniforms, information technology, alignment of labor union contracts and fleet restructuring.
Conference Call / Webcast Details
The Company will conduct a live audio webcast of its earnings call today at 7:30 a.m. CDT, which will be available to the public on a listen-only basis at aa.com/investorrelations. An archive of the webcast will be available on the website through Nov. 20.
Investor Guidance
For financial forecasting detail, please refer to the Company’s investor relations update, to be filed with the Securities and Exchange Commission on Form 8-K immediately following its 7:30 a.m. CDT conference call. This filing will be available at aa.com/investorrelations.
About American Airlines Group
American Airlines and American Eagle offer an average of nearly 6,700 flights per day to nearly 350 destinations in more than 50 countries. American has hubs in Charlotte, Chicago, Dallas/Fort Worth, Los Angeles, Miami, New York, Philadelphia, Phoenix, and Washington, D.C. American is a founding member of the oneworld® alliance, whose members serve more than 1,000 destinations with about 14,250 daily flights to over 150 countries. Shares of American Airlines Group Inc. trade on Nasdaq under the ticker symbol AAL. In 2015, its stock joined the S&P 500 index. Connect with American on Twitter @AmericanAir and at Facebook.com/AmericanAirlines.
1 Adjusted earnings exclude non-cash income tax provision and special charges where noted. See the accompanying notes in the Financial Tables section of this press release for further explanation, including a reconciliation of all GAAP to non-GAAP financial information.
Cautionary Statement Regarding Forward-Looking Statements and Information
This document includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by words such as “may,” “will,” “expect,” “intend,” “anticipate,” “believe,” “estimate,” “plan,” “project,” “could,” “should,” “would,” “continue,” “seek,” “target,” “guidance,” “outlook,” “if current trends continue,” “optimistic,” “forecast” and other similar words. Such statements include, but are not limited to, statements about future financial and operating results, the Company’s plans, objectives, estimates, expectations and intentions, and other statements that are not historical facts such as, without limitation, statements that discuss the possible future effects of known trends or uncertainties, or which indicate that the future effects of known trends or uncertainties cannot be predicted, guaranteed or assured. These forward-looking statements are based on the Company’s current objectives, beliefs and expectations, and they are subject to significant risks and uncertainties that may cause actual results and financial position and timing of certain events to differ materially from the information in the forward-looking statements. These risks and uncertainties include, but are not limited to the following: significant operating losses in the future; downturns in economic conditions that adversely affect the Company’s business; the impact of continued periods of high volatility in fuel costs, increased fuel prices and significant disruptions in the supply of aircraft fuel; competitive practices in the industry, including the impact of low-cost carriers, airline alliances and industry consolidation; the challenges and costs of integrating operations and realizing anticipated synergies and other benefits of the merger transaction with US Airways Group, Inc.; costs of ongoing data security compliance requirements and the impact of any significant data security breach; the Company’s substantial indebtedness and other obligations and the effect they could have on the Company’s business and liquidity; an inability to obtain sufficient financing or other capital to operate successfully and in accordance with the Company’s current business plan; increased costs of financing, a reduction in the availability of financing and fluctuations in interest rates; the effect the Company’s high level of fixed obligations may have on its ability to fund general corporate requirements, obtain additional financing and respond to competitive developments and adverse economic and industry conditions; the Company’s significant pension and other postretirement benefit funding obligations; the impact of any failure to comply with the covenants contained in financing arrangements; provisions in credit card processing and other commercial agreements that may materially reduce the Company’s liquidity; the impact of union disputes, employee strikes and other labor-related disruptions; any inability to maintain labor costs at competitive levels; interruptions or disruptions in service at one or more of the Company’s hub airports; any inability to obtain and maintain adequate facilities, infrastructure and slots to operate the Company’s flight schedule and expand or change its route network; the Company’s reliance on third-party regional operators or third-party service providers that have the ability to affect the Company’s revenue and the public’s perception about its services; any inability to effectively manage the costs, rights and functionality of third-party distribution channels on which the Company relies; extensive government regulation, which may result in increases in the Company’s costs, disruptions to the Company’s operations, limits on the Company’s operating flexibility, reductions in the demand for air travel, and competitive disadvantages; the impact of the heavy taxation on the airline industry; changes to the Company’s business model that may not successfully increase revenues and may cause operational difficulties or decreased demand; the loss of key personnel or inability to attract and retain additional qualified personnel; the impact of conflicts overseas, terrorist attacks and ongoing security concerns; the global scope of the Company’s business and any associated economic and political instability or adverse effects of events, circumstances or government actions beyond its control, including the impact of foreign currency exchange rate fluctuations and limitations on the repatriation of cash held in foreign countries; the impact of environmental and noise regulation; the impact associated with climate change, including increased regulation to reduce emissions of greenhouse gases; the Company’s reliance on technology and automated systems and the impact of any failure of these technologies or systems; challenges in integrating the Company’s computer, communications and other technology systems; losses and adverse publicity stemming from any accident involving any of the Company’s aircraft or the aircraft of its regional or codeshare operators; delays in scheduled aircraft deliveries, or other loss of anticipated fleet capacity, and failure of new aircraft to perform as expected; the Company’s dependence on a limited number of suppliers for aircraft, aircraft engines and parts; the impact of changing economic and other conditions beyond the Company’s control, including global events that affect travel behavior such as an outbreak of a contagious disease, and volatility and fluctuations in the Company’s results of operations due to seasonality; the effect of a higher than normal number of pilot retirements, more stringent duty-time regulations, increased flight hour requirements for commercial airline pilots and other factors that have caused a shortage of pilots; the impact of possible future increases in insurance costs or reductions in available insurance coverage; the effect on the Company’s financial position and liquidity of being party to or involved in litigation; an inability to use net operating losses carried forward from prior taxable years (NOL Carryforwards); any impairment in the amount of the Company’s goodwill and an inability to realize the full value of the Company’s intangible or long-lived assets and any material impairment charges that would be recorded as a result; price volatility of the Company’s common stock; the effects of the Company’s capital deployment program and the limitation, suspension or discontinuation of the Company’s share repurchase programs or dividend payments thereunder; delay or prevention of stockholders’ ability to change the composition of the Company’s board of directors and the effect this may have on takeover attempts that some of the Company’s stockholders might consider beneficial; the effect of provisions of the Company’s Restated Certificate of Incorporation and Amended and Restated Bylaws that limit ownership and voting of its equity interests, including its common stock; the effect of limitations in the Company’s Restated Certificate of Incorporation on acquisitions and dispositions of its common stock designed to protect its NOL Carryforwards and certain other tax attributes, which may limit the liquidity of its common stock; and other economic, business, competitive, and/or regulatory factors affecting the Company’s business, including those set forth in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2016 (especially in Part I, Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations, and Part II, Item 1A, Risk Factors) and other risks and uncertainties listed from time to time in the Company’s other filings with the SEC. There may be other factors of which the Company is not currently aware that may affect matters discussed in the forward-looking statements and may also cause actual results to differ materially from those discussed. Any forward-looking statements speak only as of the date hereof or as of the dates indicated in the statements. The Company does not assume any obligation to publicly update or supplement any forward-looking statement to reflect actual results, changes in assumptions or changes in other factors affecting these forward-looking statements other than as required by law.
American Airlines Group Inc.
Condensed Consolidated Statements of Operations
(In millions, except share and per share amounts)
(Unaudited)
3 Months Ended
September 30, Percent 9 Months Ended
September 30, Percent
2016 2015 Change 2016 2015 Change
Operating revenues:
Mainline passenger $ 7,419 $ 7,654 (3.1 ) $ 21,192 $ 22,298 (5.0 )
Regional passenger 1,731 1,699 1.9 5,040 4,910 2.7
Cargo 171 180 (5.1 ) 506 568 (10.9 )
Other 1,273 1,173 8.5 3,653 3,584 1.9
Total operating revenues 10,594 10,706 (1.1 ) 30,391 31,360 (3.1 )
Operating expenses:
Aircraft fuel and related taxes 1,393 1,593 (12.6 ) 3,736 4,912 (23.9 )
Salaries, wages and benefits 2,772 2,404 15.3 8,094 7,141 13.4
Regional expenses:
Fuel 303 310 (2.4 ) 801 970 (17.4 )
Other 1,235 1,208 2.3 3,687 3,566 3.4
Maintenance, materials and repairs 481 456 5.3 1,352 1,452 (6.9 )
Other rent and landing fees 463 432 7.2 1,342 1,290 4.0
Aircraft rent 299 308 (3.0 ) 908 941 (3.6 )
Selling expenses 347 366 (5.0 ) 990 1,051 (5.9 )
Depreciation and amortization 399 336 18.6 1,128 1,013 11.4
Special items, net 289 163 77.8 450 610 (26.3 )
Other 1,182 1,131 4.5 3,386 3,278 3.3
Total operating expenses 9,163 8,707 5.2 25,874 26,224 (1.3 )
Operating income 1,431 1,999 (28.4 ) 4,517 5,136 (12.0 )
Nonoperating income (expense):
Interest income 16 10 70.6 45 29 54.9
Interest expense, net (250 ) (219 ) 14.3 (738 ) (651 ) 13.2
Other, net (8 ) (81 ) (90.3 ) (25 ) (143 ) (82.2 )
Total nonoperating expense, net (242 ) (290 ) (16.8 ) (718 ) (765 ) (6.2 )
Income before income taxes 1,189 1,709 (30.4 ) 3,799 4,371 (13.1 )
Income tax provision 452 16 nm 1,412 42 nm
Net income $ 737 $ 1,693 (56.4 ) $ 2,387 $ 4,329 (44.9 )
Earnings per common share:
Basic $ 1.40 $ 2.56 $ 4.23 $ 6.34
Diluted $ 1.40 $ 2.49 $ 4.20 $ 6.17
Weighted average shares outstanding (in thousands):
Basic 525,415 661,869 564,886 682,337
Diluted 528,510 680,739 568,679 701,760
Note: Percent change may not recalculate due to rounding.
American Airlines Group Inc.
Consolidated Operating Statistics
(Unaudited)
3 Months Ended
September 30, 9 Months Ended
September 30,
2016 2015 Change 2016 2015 Change
Mainline
Revenue passenger miles (millions) 53,472 54,667 (2.2 ) % 151,619 151,148 0.3 %
Available seat miles (ASM) (millions) 63,751 63,459 0.5 % 183,985 181,232 1.5 %
Passenger load factor (percent) 83.9 86.1 (2.2 ) pts 82.4 83.4 (1.0 ) pts
Yield (cents) 13.87 14.00 (0.9 ) % 13.98 14.75 (5.3 ) %
Passenger revenue per ASM (cents) 11.64 12.06 (3.5 ) % 11.52 12.30 (6.4 ) %
Passenger enplanements (thousands) 37,584 38,909 (3.4 ) % 109,830 110,683 (0.8 ) %
Departures (thousands) 282 286 (1.3 ) % 837 841 (0.5 ) %
Aircraft at end of period 922 943 (2.2 ) % 922 943 (2.2 ) %
Block hours (thousands) 905 908 (0.3 ) % 2,650 2,643 0.3 %
Average stage length (miles) 1,258 1,259 (0.1 ) % 1,235 1,231 0.3 %
Fuel consumption (gallons in millions) 953 954 (0.2 ) % 2,739 2,736 0.1 %
Average aircraft fuel price including related taxes (dollars per gallon) 1.46 1.67 (12.4 ) % 1.36 1.80 (24.0 ) %
Full-time equivalent employees at end of period 101,200 99,700 1.5 % 101,200 99,700 1.5 %
Operating cost per ASM (cents) 11.96 11.33 5.6 % 11.62 11.97 (2.9 ) %
Operating cost per ASM excluding special items (cents) 11.51 11.07 3.9 % 11.38 11.63 (2.2 ) %
Operating cost per ASM excluding special items and fuel (cents) 9.32 8.56 8.9 % 9.35 8.92 4.8 %
Regional (A)
Revenue passenger miles (millions) 6,447 6,199 4.0 % 18,406 17,729 3.8 %
Available seat miles (millions) 8,160 7,633 6.9 % 23,741 22,050 7.7 %
Passenger load factor (percent) 79.0 81.2 (2.2 ) pts 77.5 80.4 (2.9 ) pts
Yield (cents) 26.85 27.40 (2.0 ) % 27.38 27.69 (1.1 ) %
Passenger revenue per ASM (cents) 21.21 22.25 (4.7 ) % 21.23 22.27 (4.7 ) %
Passenger enplanements (thousands) 14,288 14,413 (0.9 ) % 40,908 41,032 (0.3 ) %
Aircraft at end of period 599 584 2.6 % 599 584 2.6 %
Fuel consumption (gallons in millions) 196 186 5.3 % 565 536 5.4 %
Average aircraft fuel price including related taxes (dollars per gallon) 1.55 1.67 (7.3 ) % 1.42 1.81 (21.6 ) %
Full-time equivalent employees at end of period (B) 20,600 19,300 6.7 % 20,600 19,300 6.7 %
Operating cost per ASM (cents) 18.85 19.89 (5.2 ) % 18.91 20.57 (8.1 ) %
Operating cost per ASM excluding special items (cents) 18.79 19.85 (5.3 ) % 18.85 20.48 (8.0 ) %
Operating cost per ASM excluding special items and fuel (cents) 15.08 15.78 (4.5 ) % 15.48 16.08 (3.8 ) %
Total Mainline & Regional
Revenue passenger miles (millions) 59,919 60,866 (1.6 ) % 170,025 168,877 0.7 %
Available seat miles (millions) 71,911 71,092 1.2 % 207,726 203,282 2.2 %
Cargo ton miles (millions) 601 569 5.6 % 1,754 1,716 2.2 %
Passenger load factor (percent) 83.3 85.6 (2.3 ) pts 81.9 83.1 (1.2 ) pts
Yield (cents) 15.27 15.37 (0.6 ) % 15.43 16.11 (4.2 ) %
Passenger revenue per ASM (cents) 12.72 13.16 (3.3 ) % 12.63 13.38 (5.6 ) %
Total revenue per ASM (cents) 14.73 15.06 (2.2 ) % 14.63 15.43 (5.2 ) %
Cargo yield per ton mile (cents) 28.42 31.63 (10.2 ) % 28.86 33.11 (12.8 ) %
Passenger enplanements (thousands) 51,872 53,322 (2.7 ) % 150,738 151,715 (0.6 ) %
Aircraft at end of period 1,521 1,527 (0.4 ) % 1,521 1,527 (0.4 ) %
Fuel consumption (gallons in millions) 1,149 1,140 0.7 % 3,304 3,272 1.0 %
Average aircraft fuel price including related taxes (dollars per gallon) 1.48 1.67 (11.6 ) % 1.37 1.80 (23.6 ) %
Full-time equivalent employees at end of period (B) 121,800 119,000 2.4 % 121,800 119,000 2.4 %
Operating cost per ASM (cents) 12.74 12.25 4.0 % 12.46 12.90 (3.4 ) %
Operating cost per ASM excluding special items (cents) 12.33 12.02 2.6 % 12.23 12.59 (2.8 ) %
Operating cost per ASM excluding special items and fuel (cents) 9.97 9.34 6.8 % 10.05 9.70 3.6 %
(A) Regional includes wholly owned regional airline subsidiaries and operating results from capacity purchase carriers.
(B) Regional full-time equivalent employees only include our wholly owned regional airline subsidiaries.
Note: Amounts may not recalculate due to rounding.
American Airlines Group Inc.
Consolidated Revenue Statistics by Region
(Unaudited)
3 Months Ended
September 30, 9 Months Ended
September 30,
2016 2015 Change 2016 2015 Change
Domestic - Mainline
Revenue passenger miles (millions) 33,487 34,259 (2.4 ) % 97,296 97,014 0.3 %
Available seat miles (ASM) (millions) 39,051 38,882 0.4 % 114,294 112,875 1.3 %
Passenger load factor (percent) 85.8 88.1 (2.3 ) pts 85.1 85.9 (0.8 ) pts
Yield (cents) 14.36 14.19 1.2 % 14.51 15.09 (3.8 ) %
Passenger revenue per ASM (cents) 12.31 12.51 (1.5 ) % 12.35 12.97 (4.8 ) %
Domestic Consolidated - Mainline and
Total Regional (A)
Revenue passenger miles (millions) 39,934 40,458 (1.3 ) % 115,701 114,743 0.8 %
Available seat miles (ASM) (millions) 47,211 46,515 1.5 % 138,036 134,926 2.3 %
Passenger load factor (percent) 84.6 87.0 (2.4 ) pts 83.8 85.0 (1.2 ) pts
Yield (cents) 16.37 16.22 1.0 % 16.56 17.03 (2.8 ) %
Passenger revenue per ASM (cents) 13.85 14.10 (1.8 ) % 13.88 14.49 (4.2 ) %
Latin America
Revenue passenger miles (millions) 7,382 7,920 (6.8 ) % 22,857 23,673 (3.4 ) %
Available seat miles (ASM) (millions) 8,944 9,542 (6.3 ) % 28,894 30,031 (3.8 ) %
Passenger load factor (percent) 82.5 83.0 (0.5 ) pts 79.1 78.8 0.3 pts
Yield (cents) 13.97 13.65 2.3 % 13.47 14.87 (9.4 ) %
Passenger revenue per ASM (cents) 11.53 11.33 1.8 % 10.66 11.72 (9.1 ) %
Atlantic
Revenue passenger miles (millions) 9,027 9,661 (6.6 ) % 21,707 22,654 (4.2 ) %
Available seat miles (ASM) (millions) 11,533 11,754 (1.9 ) % 29,103 29,075 0.1 %
Passenger load factor (percent) 78.3 82.2 (3.9 ) pts 74.6 77.9 (3.3 ) pts
Yield (cents) 13.49 14.46 (6.7 ) % 14.01 14.45 (3.0 ) %
Passenger revenue per ASM (cents) 10.56 11.88 (11.2 ) % 10.45 11.26 (7.2 ) %
Pacific
Revenue passenger miles (millions) 3,576 2,827 26.5 % 9,759 7,807 25.0 %
Available seat miles (ASM) (millions) 4,223 3,281 28.7 % 11,694 9,251 26.4 %
Passenger load factor (percent) 84.7 86.2 (1.5 ) pts 83.5 84.4 (0.9 ) pts
Yield (cents) 10.13 11.11 (8.9 ) % 9.79 11.13 (12.0 ) %
Passenger revenue per ASM (cents) 8.58 9.58 (10.5 ) % 8.17 9.39 (13.0 ) %
Total International
Revenue passenger miles (millions) 19,985 20,408 (2.1 ) % 54,323 54,134 0.4 %
Available seat miles (ASM) (millions) 24,700 24,577 0.5 % 69,691 68,357 2.0 %
Passenger load factor (percent) 80.9 83.0 (2.1 ) pts 77.9 79.2 (1.3 ) pts
Yield (cents) 13.06 13.68 (4.5 ) % 13.03 14.15 (8.0 ) %
Passenger revenue per ASM (cents) 10.57 11.36 (7.0 ) % 10.15 11.21 (9.4 ) %
(A) Revenue statistics for all Regional flying are included herein.
Note: Amounts may not recalculate due to rounding.
Reconciliation of GAAP Financial Information to Non-GAAP Financial Information
American Airlines Group Inc. (the "Company") is providing the reconciliation of reported non-GAAP financial measures to their comparable financial measures on a GAAP basis. The Company believes that the non-GAAP financial measures provide investors the ability to measure financial performance excluding special items, which is more indicative of the Company’s ongoing performance and is more comparable to measures reported by other major airlines. The Company believes that the presentation of mainline and regional CASM excluding fuel is useful to investors because both the cost and availability of fuel are subject to many economic and political factors beyond the Company’s control. Management uses mainline and regional CASM excluding special items and fuel to evaluate the Company's operating performance.
3 Months Ended
September 30, Percent
Change 9 Months Ended
September 30, Percent Change
Reconciliation of Pre-Tax Income Excluding Special Items 2016 2015 2016 2015
(in millions, except per share amounts) (in millions, except per share amounts)
Pre-tax income as reported $ 1,189 $ 1,709 $ 3,799 $ 4,371
Pre-tax special items:
Special items, net (1) 289 163 450 610
Regional operating special items, net 5 2 13 20
Nonoperating special items, net (2) - 21 36 2
Total pre-tax special items 294 186 499 632
Pre-tax income excluding special items $ 1,483 $ 1,895 -22 % $ 4,298 $ 5,003 -14 %
Calculation of Pre-Tax Margin
Pre-tax income as reported $ 1,189 $ 1,709 $ 3,799 $ 4,371
Total operating revenues as reported $ 10,594 $ 10,706 $ 30,391 $ 31,360
Pre-tax margin 11.2 % 16.0 % 12.5 % 13.9 %
Calculation of Pre-Tax Margin Excluding Special Items
Pre-tax income excluding special items $ 1,483 $ 1,895 $ 4,298 $ 5,003
Total operating revenues as reported $ 10,594 $ 10,706 $ 30,391 $ 31,360
Pre-tax margin excluding special items 14.0 % 17.7 % 14.1 % 16.0 %
Reconciliation of Net Income Excluding Special Items
Net income as reported $ 737 $ 1,693 $ 2,387 $ 4,329
Special items:
Total pre-tax special items 294 186 499 632
Income tax special items - 6 - 22
Net tax effect of special items (3) (98 ) - (188 ) -
Net income excluding special items $ 933 $ 1,885 -51 % $ 2,698 $ 4,983 -46 %
Reconciliation of Net Income Excluding Special Items and Non-Cash
Income Tax Provision (4)
Net income as reported $ 737 $ 1,693 $ 2,387 $ 4,329
Total pre-tax special items 294 186 499 632
Total non-cash income tax provision 449 6 1,403 22
Net income excluding special items and non-cash income tax provision $ 1,480 $ 1,885 -21 % $ 4,289 $ 4,983 -14 %
Reconciliation of Basic and Diluted Earnings Per Share Excluding
Special Items
Net income excluding special items $ 933 $ 1,885 $ 2,698 $ 4,983
Shares used for computation (in thousands):
Basic 525,415 661,869 564,886 682,337
Diluted 528,510 680,739 568,679 701,760
Earnings per share excluding special items:
Basic $ 1.77 $ 2.85 $ 4.78 $ 7.30
Diluted $ 1.76 $ 2.77 $ 4.74 $ 7.10
Reconciliation of Basic and Diluted Earnings Per Share Excluding
Special Items and Non-Cash Income Tax Provision (4)
Net income excluding special items and non-cash income tax provision $ 1,480 $ 1,885 $ 4,289 $ 4,983
Shares used for computation (in thousands):
Basic 525,415 661,869 564,886 682,337
Diluted 528,510 680,739 568,679 701,760
Adjusted earnings per share (excludes special items and non-cash income tax provision):
Basic $ 2.82 $ 2.85 $ 7.59 $ 7.30
Diluted $ 2.80 $ 2.77 $ 7.54 $ 7.10
3 Months Ended
September 30, 9 Months Ended
September 30,
Reconciliation of Operating Income Excluding Special Items 2016 2015 2016 2015
(in millions) (in millions)
Operating income as reported $ 1,431 $ 1,999 $ 4,517 $ 5,136
Special items:
Special items, net (1) 289 163 450 610
Regional operating special items, net 5 2 13 20
Operating income excluding special items $ 1,725 $ 2,164 $ 4,980 $ 5,766
Reconciliation of Operating Cost per ASM Excluding Special 3 Months Ended
September 30, 9 Months Ended
September 30,
Items and Fuel - Mainline only 2016 2015 2016 2015
(in millions) (in millions)
Total operating expenses as reported $ 9,163 $ 8,707 $ 25,874 $ 26,224
Less regional expenses as reported:
Fuel (303 ) (310 ) (801 ) (970 )
Other (1,235 ) (1,208 ) (3,687 ) (3,566 )
Total mainline operating expenses as reported 7,625 7,189 21,386 21,688
Special items, net (1) (289 ) (163 ) (450 ) (610 )
Mainline operating expenses, excluding special items 7,336 7,026 20,936 21,078
Aircraft fuel and related taxes (1,393 ) (1,593 ) (3,736 ) (4,912 )
Mainline operating expenses, excluding special items and fuel $ 5,943 $ 5,433 $ 17,200 $ 16,166
(in cents) (in cents)
Mainline operating expenses per ASM as reported 11.96 11.33 11.62 11.97
Special items, net per ASM (1) (0.45 ) (0.26 ) (0.24 ) (0.34 )
Mainline operating expenses per ASM, excluding special items 11.51 11.07 11.38 11.63
Aircraft fuel and related taxes per ASM (2.18 ) (2.51 ) (2.03 ) (2.71 )
Mainline operating expenses per ASM, excluding special items
and fuel 9.32 8.56 9.35 8.92
Note: Amounts may not recalculate due to rounding.
Reconciliation of Operating Cost per ASM Excluding Special 3 Months Ended
September 30, 9 Months Ended
September 30,
Items and Fuel - Regional only 2016 2015 2016 2015
(in millions) (in millions)
Total regional operating expenses as reported $ 1,538 $ 1,518 $ 4,488 $ 4,536
Regional operating special items, net (5 ) (2 ) (13 ) (20 )
Regional operating expenses, excluding special items 1,533 1,516 4,475 4,516
Aircraft fuel and related taxes (303 ) (310 ) (801 ) (970 )
Regional operating expenses, excluding special items and fuel $ 1,230 $ 1,206 $ 3,674 $ 3,546
(in cents) (in cents)
Regional operating expenses per ASM as reported 18.85 19.89 18.91 20.57
Regional operating special items, net per ASM (0.06 ) (0.04 ) (0.05 ) (0.09 )
Regional operating expenses per ASM, excluding special items 18.79 19.85 18.85 20.48
Aircraft fuel and related taxes per ASM (3.71 ) (4.07 ) (3.38 ) (4.40 )
Regional operating expenses per ASM, excluding special items and fuel 15.08 15.78 15.48 16.08
Note: Amounts may not recalculate due to rounding.
Reconciliation of Operating Cost per ASM Excluding Special 3 Months Ended
September 30, 9 Months Ended
September 30,
Items and Fuel - Total Mainline and Regional 2016 2015 2016 2015
(in millions) (in millions)
Total operating expenses as reported $ 9,163 $ 8,707 $ 25,874 $ 26,224
Special items:
Special items, net (1) (289 ) (163 ) (450 ) (610 )
Regional operating special items, net (5 ) (2 ) (13 ) (20 )
Total operating expenses, excluding special items 8,869 8,542 25,411 25,594
Fuel:
Aircraft fuel and related taxes - mainline (1,393 ) (1,593 ) (3,736 ) (4,912 )
Aircraft fuel and related taxes - regional (303 ) (310 ) (801 ) (970 )
Total operating expenses, excluding special items and fuel $ 7,173 $ 6,639 $ 20,874 $ 19,712
(in cents) (in cents)
Total operating expenses per ASM as reported 12.74 12.25 12.46 12.90
Special items per ASM:
Special items, net (1) (0.40 ) (0.23 ) (0.22 ) (0.30 )
Regional operating special items, net (0.01 ) - (0.01 ) (0.01 )
Total operating expenses per ASM, excluding special items 12.33 12.02 12.23 12.59
Fuel per ASM:
Aircraft fuel and related taxes - mainline (1.94 ) (2.24 ) (1.80 ) (2.42 )
Aircraft fuel and related taxes - regional (0.42 ) (0.44 ) (0.39 ) (0.48 )
Total operating expenses per ASM, excluding special items
and fuel 9.97 9.34 10.05 9.70
Note: Amounts may not recalculate due to rounding.
FOOTNOTES:
(1 ) The 2016 third quarter mainline operating special items totaled a net charge of $289 million, which principally included $225 million of merger integration expenses and a $39 million net charge for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations. The 2016 nine month period mainline operating special items totaled a net charge of $450 million, which principally included $467 million of merger integration expenses, offset in part by a $22 million net credit for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations. For the 2016 third quarter and nine month periods, merger integration expenses included costs related to re-branding of aircraft, airport facilities and uniforms, information technology, alignment of labor union contracts, fleet restructuring, professional fees, relocation and training, as well as severance.
The 2015 third quarter mainline operating special items totaled a net charge of $163 million, which principally included $198 million of merger integration expenses and a $38 million charge in connection with the dissolution of a joint venture. These charges were offset in part by a $66 million credit related to proceeds received from a legal settlement. The 2015 nine month period mainline operating special items totaled a net charge of $610 million, which principally included $741 million of merger integration expenses and a $38 million charge in connection with the dissolution of a joint venture. These charges were offset in part by a $75 million net credit for bankruptcy related items principally consisting of fair value adjustments for bankruptcy settlement obligations and a $66 million credit related to proceeds received from a legal settlement. For the 2015 third quarter and nine month periods, merger integration expenses included costs related to information technology, fleet restructuring, alignment of labor union contracts, professional fees, severance, relocation and training, re-branding of aircraft, airport facilities and uniforms, as well as share-based compensation.
(2 ) In connection with a bond refinancing, the Company recorded a $36 million nonoperating special charge in the 2016 nine month period related to non-cash write offs of unamortized bond discounts and issuance costs as well as payments of redemption premiums and fees.
The 2015 third quarter nonoperating special items totaled a net charge of $21 million, which was primarily due to non-cash write offs of unamortized debt discount and debt issuance costs associated with the purchase and subsequent remarketing of certain special facility revenue bonds. The 2015 nine month period nonoperating special items totaled a net charge of $2 million, which principally included $40 million in charges primarily related to non-cash write offs of unamortized debt discount and debt issuance costs associated with refinancing the Company’s secured term loan facilities, prepayments of certain aircraft financings and the purchase and subsequent remarketing of certain special facility revenue bonds. These charges were offset in part by a $22 million gain associated with the sale of an investment and a $17 million early debt extinguishment gain associated with the repayment of American’s AAdvantage loan with Citibank.
(3 ) In the 2015 periods, there was no net tax effect associated with special items. During the 2015 periods, the Company’s net deferred tax asset, which includes its net operating losses (NOLs), was subject to a full valuation allowance. Accordingly, the Company’s NOLs offset its taxable income and resulted in the release of a corresponding portion of valuation allowance, which offset the tax provision dollar for dollar.
(4 ) As a result of the Company's profitability and the reversal of the valuation allowance on its deferred tax assets at December 31, 2015, the Company was required to recognize a $452 million and $1.4 billion provision for income taxes in the 2016 third quarter and nine month period, respectively, on a Generally Accepted Accounting Principles basis. Of these amounts, $449 million and $1.4 billion in the 2016 third quarter and nine month period, respectively, were non-cash due to the utilization of NOLs. For periods prior to 2016, the Company recognized a nominal tax provision for certain states and international jurisdictions where NOLs were limited or not available to be used. Accordingly, amounts reported in the 2016 third quarter and nine month period for income tax provision and net income are not comparable to the respective 2015 periods. Therefore, the Company is presenting net income and earnings per share excluding special items and non-cash income tax provision in order to provide more meaningful period-over-period comparisons.
American Airlines Group Inc.
Condensed Consolidated Balance Sheets
(In millions)
(Unaudited)
September 30, 2016 December 31, 2015
Assets
Current assets
Cash $ 381 $ 390
Short-term investments 6,374 5,864
Restricted cash and short-term investments 635 695
Accounts receivable, net 1,703 1,425
Aircraft fuel, spare parts and supplies, net 1,100 863
Prepaid expenses and other 855 748
Total current assets 11,048 9,985
Operating property and equipment
Flight equipment 36,259 33,185
Ground property and equipment 6,915 6,402
Equipment purchase deposits 1,149 1,067
Total property and equipment, at cost 44,323 40,654
Less accumulated depreciation and amortization (14,019 ) (13,144 )
Total property and equipment, net 30,304 27,510
Other assets
Goodwill 4,091 4,091
Intangibles, net 2,189 2,249
Deferred tax asset 1,524 2,477
Other assets 1,952 2,103
Total other assets 9,756 10,920
Total assets $ 51,108 $ 48,415
Liabilities and Stockholders’ Equity
Current liabilities
Current maturities of long-term debt and capital leases $ 1,798 $ 2,231
Accounts payable 1,673 1,563
Accrued salaries and wages 1,365 1,205
Air traffic liability 4,513 3,747
Loyalty program liability 2,950 2,525
Other accrued liabilities 2,234 2,334
Total current liabilities 14,533 13,605
Noncurrent liabilities
Long-term debt and capital leases, net of current maturities 21,545 18,330
Pension and postretirement benefits 7,387 7,450
Deferred gains and credits, net 554 667
Other liabilities 2,698 2,728
Total noncurrent liabilities 32,184 29,175
Stockholders' equity
Common stock 5 6
Additional paid-in capital 7,761 11,591
Accumulated other comprehensive loss (4,778 ) (4,732 )
Retained earnings (deficit) 1,403 (1,230 )
Total stockholders' equity 4,391 5,635
Total liabilities and stockholders’ equity $ 51,108 $ 48,415
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