EPCOR Utilities Inc. · 2 Forward-Looking Information . Certain information in this presentation...
Transcript of EPCOR Utilities Inc. · 2 Forward-Looking Information . Certain information in this presentation...
EPCOR Utilities Inc. Infrastructure and Utilities Conference February 2012
Mark Wiltzen Senior Vice President and Chief Financial Officer
Sam Myers Treasurer
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Forward-Looking Information Certain information in this presentation and in oral answers to questions may contain forward-looking information statements or forward-looking information together, “forward-looking information”. Forward-looking information is based on current expectations, estimates and projections that involve a number of risks which could cause actual results to vary and in some instances to differ materially from those anticipated by EPCOR. Forward-looking information is based on the estimates and opinions of management at the time the information is presented. Actual results could differ materially from conclusions, forecasts or projections in the forward-looking information, and certain material factors or assumptions were applied in drawing conclusions or making forecasts or projections as reflected in the forward-looking information. Additional information about the material factors and risks that could cause actual results to differ materially from the conclusions, forecasts or projections in the forward-looking information and the material factors or assumptions that were applied in drawing a conclusion or making a forecast or projection as reflected in the forward-looking information is contained in the most recent annual Management Discussion and Analysis filed on SEDAR (www.sedar.com) and EPCOR’s website (www.epcor.ca).
Readers are cautioned not to place undue reliance on forward-looking statements as actual results could differ materially from the plans, expectations, estimates or intentions expressed in the forward-looking statements. Except as required by law, EPCOR assumes no obligation to update any forward-looking information, should circumstances or management’s estimates or opinions change, or any other reason.
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Business of EPCOR
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Company Overview
• Diversified electricity services and water services provider headquartered in Edmonton, Alberta • Minority ownership in Capital Power, a power generation business • 2010 revenue of C$1,473 million and EBITDA of C$300 million • Wholly-owned by the City of Edmonton for over 100 years • Geographically diverse operations in Canada with recent acquisitions in the US
20%
56%
24%
D&T Energy Services Water
37%
18%
45%
D&T Energy Services Water
2010 Consolidated Revenue 2010 Consolidated Operating Income
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• Continued focus on water and wires utility infrastructure and divest Capital Power interest in accordance with underlying agreements and as market conditions permit
• Pursue rate regulated and long term contracted investment opportunities
• Continue to build reputation as a trusted developer and operator of utility assets
• Deliver stable cash flow and maximize returns on existing assets
• Preserve or improve financial strength and corporate ratings: A (low) (DBRS) and BBB+ (S&P)
Strategy
Municipal Water AZ
Legend Electricity COE & AB
Industrial Water COE & AB
Municipal Water COE
Municipal Water AB & BC
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Growth – Focus Areas
EPCOR’s strategy is to focus on rate-regulated businesses or long term contracted commercial agreements
Capital Region
US Southwest - Arizona
Alberta & B.C.
Muni
cipal
Wat
er
and
Was
tewa
ter
WS Growth
Acquisitions
Development
Indu
stria
l Wat
er
and
Was
tewa
ter Potable W&WW
Tailings Treatment
Re-use
Elec
tricit
y
D&T Growth
TechnologiesIndependent Transmission
Energy Services 33
Growth Hunting Permit
Capital Region
US Southwest - Arizona
Alberta & B.C.
Muni
cipal
Wat
er
and
Was
tewa
ter
WS Growth
Acquisitions
Development
Indu
stria
l Wat
er
and
Was
tewa
ter Potable W&WW
Tailings Treatment
Re-use
Elec
tricit
y
D&T Growth
TechnologiesIndependent Transmission
Energy Services 33
Growth Hunting Permit
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Water • Owns and operates rate regulated and contracted water treatment and wastewater
treatment facilities
Distribution and Transmission • Owns and operates electricity transmission and distribution assets in Alberta
Energy Services • Provides electricity regulated rate service to residential and small commercial customers
as well as default supply electricity services
Interest in Capital Power • Remaining interest in Capital Power
EPCOR Business Summary
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Recent Developments
• Acquisition of Arizona American Water Company and New Mexico American Water Company, US $470 million, 106,000 water and 51,000 wastewater customers in Arizona, 17,000 water customers in New Mexico (January 2012)
• Acquisition of Chaparral City Water Company, US $35 million, Arizona, 13,000 customers (June 2011)
• Heartland Transmission Project regulatory approval (partnership with Altalink), estimated project cost (~$ 400 million), targeted completion 2013
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Financial Overview
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Historical Operating Income
Segmented Operating Income Margin
Operating Income Breakdown By Segment
• While the divestiture of EPCOR’s generation business decreased revenue and operating income, it has reduced the volatility of EPCOR’s Operating Margin
• The Generation and Corporate segments represent the generation business (pre and post restructuring)
$480
$566
$304$330
$212
$-
$100
$200
$300
$400
$500
$600
2006 2007 2008 2009 2010
Water Services Distribution and Transmission Energy Services Generation Corporate Total
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
2006 2007 2008 2009 2010
Water Services Distribution and Transmission Energy Services Generation
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Debt to Capitalization Ratio
•EPCOR will continue to target a Consolidated Senior Debt to Consolidated Capitalization ratio of 40% to 60%
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Financing and Liquidity
• Syndicated bank credit facility of $500 million (Two tranches of $250 million) • Recently extended to November 2014 and November 2016
• Syndicated Letter of Credit bank credit facility of $400 million
• Demand Facilities for approximately $45 million • $25 million CAD, $20 million USD
• $500 million Commercial Paper program
• Strategy in place to monetize interest in Capital Power • $221 million transacted in December 2010 • $224 million transacted in November 2011
• Unutilized $1 billion Canadian Medium Term Note (MTN) Base Shelf Prospectus available to January 2014 which provides access to Canadian MTN market
• $250 million USD private placement of debt in December 2011 • $138 million 10-year, $112 million 30-year
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Debt Maturities
$0
$100
$200
$300
$400
$500
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2038 2039 2041
$ M
illio
ns
EUI EUI with B2B EUI USD
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Consistent and Predictable Cash Flow and Solid Credit Metrics • Maintain moderate leverage, conservative policies and strong coverage ratios
Strong Credit Ratings and Longstanding, Stable Ownership • S&P: BBB+, DBRS: A(low)
Growth in Rate-Regulated and Long Term Contracted Businesses • Capital investment in Edmonton and Fort McMurray, Alberta • Chaparral, Arizona American Water, and New Mexico American Water
Continued Divestiture of Capital Power • Reduced exposure to power generation business
Investment Highlights
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Questions?
www.epcor.ca