Delaware | 1-12079 | 77-0212977 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
ITEM 2.02 — RESULTS OF OPERATIONS AND FINANCIAL CONDITION | ||
ITEM 9.01 — FINANCIAL STATEMENTS AND EXHIBITS | ||
SIGNATURES | ||
EXHIBIT INDEX |
(d) | Exhibits |
Exhibit No. | Description | |
99.1 | Calpine Corporation Press Release dated August 1, 2014.* |
* | Furnished herewith. |
By: | /s/ ZAMIR RAUF | |||
Zamir Rauf | ||||
Executive Vice President and | ||||
Chief Financial Officer | ||||
August 1, 2014 |
Exhibit No. | Description | |
99.1 | Calpine Corporation Press Release dated August 1, 2014.* |
* | Furnished herewith. |
EXHIBIT 99.1 |
CONTACTS: | NEWS RELEASE |
Media Relations: | Investor Relations: |
Brett Kerr | Bryan Kimzey |
713-830-8809 | 713-830-8777 |
brett.kerr@calpine.com | bryan.kimzey@calpine.com |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||
2014 | 2013 | % Change | 2014 | 2013 | % Change | ||||||||||||||||
Operating Revenues | $ | 1,939 | $ | 1,572 | 23.3 | % | $ | 3,904 | $ | 2,813 | 38.8 | % | |||||||||
Commodity Margin | $ | 632 | $ | 533 | 18.6 | % | $ | 1,277 | $ | 994 | 28.5 | % | |||||||||
Adjusted EBITDA | $ | 413 | $ | 343 | 20.4 | % | $ | 859 | $ | 629 | 36.6 | % | |||||||||
Adjusted Free Cash Flow | $ | 99 | $ | 38 | $ | 229 | $ | (5 | ) | ||||||||||||
Per Share (diluted) | $ | 0.23 | $ | 0.08 | $ | 0.54 | $ | (0.01 | ) | ||||||||||||
Net Income (Loss)1 | $ | 139 | $ | (70 | ) | $ | 122 | $ | (195 | ) | |||||||||||
Per Share (diluted) | $ | 0.33 | $ | (0.16 | ) | $ | 0.29 | $ | (0.43 | ) | |||||||||||
Net Income (Loss), As Adjusted2 | $ | (3 | ) | $ | (33 | ) | $ | 53 | $ | (103 | ) |
2013 (Actuals) | 2014 (Current Guidance) | Growth Rate3 | ||
Adjusted EBITDA | $1,830 | $1,900 - 2,000 | 6.6% | |
Adjusted Free Cash Flow | $677 | $785 - 885 | 23% | |
Per Share Estimate (diluted) | $1.52 | $1.85 - 2.10 | 30% |
• | Power and Commercial Operations: |
— | Generated approximately 24 million MWh4 of electricity in second quarter of 2014 |
— | Achieved record-low second quarter fleetwide forced outage factor: 1.5% |
— | Entered into new contracts: |
◦ | Geysers: 225 MW, ten-year PPA commencing in 2017, subject to regulatory approval |
◦ | RockGen Energy Center: Up to 235 MW, five-year PPA commencing in 2018 |
◦ | Texas fleet: Approximately 80-90 MW of PPAs commencing in 2015/2016 |
• | Portfolio Management |
— | Completed construction of Deer Park and Channel Energy Center expansion projects in Texas |
— | Closed in July on divestiture of non-core assets from our Southeast portfolio for net proceeds of $1.53 billion5 |
• | Capital Allocation Progress: More than $1 billion committed since first quarter |
— | Completed $500 million of share repurchases; $566 million authorization remaining |
— | Deployed $350 million in July toward early retirement premiums and fees with the refinancing of $2.8 billion of debt, achieving approximately $60 million in annual interest savings and enhancing capital structure flexibility |
— | $120 million of 2023 Senior Notes callable at a price of 103 in the fourth quarter of 2014 |
— | Announcing 760 MW York 2 Energy Center in PJM, contributing to approximately $100 million of additional growth investment in 2014 |
— | Expanded revolver capacity by $500 million in July, bringing total capacity to $1.5 billion |
1 | Reported as Net Income (Loss) attributable to Calpine on our Consolidated Condensed Statements of Operations. |
2 | Refer to Table 1 for further detail of Net Income (Loss), As Adjusted. |
3 | Assuming midpoint of 2014 guidance. |
4 | Includes generation from power plants owned but not operated by Calpine and our share of generation from unconsolidated power plants. |
5 | Net of spare parts, certain planned maintenance events and other transaction costs. |
+ | our Russell City and Los Esteros power plants commencing commercial operations during the third quarter of 2013, the acquisition of Guadalupe Energy Center in February 2014 and the completion of the expansions of our Deer Park and Channel Energy Centers in June 2014 |
+ | stronger market conditions resulting in higher market spark spreads in the West and Texas |
+ | higher contribution from hedges and |
+ | higher regulatory capacity revenue in the North, partially offset by |
– | the expiration of a tolling contract associated with our Delta Energy Center in December 2013. |
+ | higher Commodity Margin, as previously discussed, partially offset by |
– | higher income tax expense resulting from a decrease in income tax benefit associated with various state and foreign jurisdiction income taxes primarily related to an increase in our pre-tax income. |
+ | stronger market conditions resulting in higher market spark spreads |
+ | higher contribution from our dual-fueled power plants in the North during the first quarter of 2014 when fuel oil prices were lower than natural gas prices |
+ | our Russell City and Los Esteros power plants commencing commercial operations during the third quarter of 2013, the acquisition of Guadalupe Energy Center in February 2014 and the completion of the expansions of our Deer Park and Channel Energy Centers in June 2014, and |
+ | higher regulatory capacity revenue in the North, partially offset by |
– | lower contribution from hedges and |
– | the expiration of a tolling contract associated with our Delta Energy Center in December 2013. |
+ | higher Commodity Margin, as previously discussed, partially offset by |
– | lower income tax benefit driven by an increase in our pre-tax income during the first half of 2014, and |
– | higher plant operating expense driven primarily by portfolio changes, and to a lesser extent, higher equipment failure expense related to outages and the reversal of previously recognized regulatory fees that benefited the first half of 2013 and did not recur in the first half of 2014. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | (in millions) | |||||||||||||||
Net income (loss) attributable to Calpine | $ | 139 | $ | (70 | ) | $ | 122 | $ | (195 | ) | ||||||
Debt extinguishment costs(1) | — | 68 | 1 | 68 | ||||||||||||
MtM (gain) loss on derivatives(1)(2) | (142 | ) | (31 | ) | (70 | ) | 24 | |||||||||
Net Income (Loss), As Adjusted(3) | $ | (3 | ) | $ | (33 | ) | $ | 53 | $ | (103 | ) |
(1) | Shown net of tax, assuming a 0% effective tax rate for these items. |
(2) | In addition to changes in market value on derivatives not designated as hedges, changes in mark-to-market (gain) loss also includes de-designation of interest rate swap cash flow hedges and related reclassification from AOCI into earnings, hedge ineffectiveness and adjustments to reflect changes in credit default risk exposure. |
(3) | See “Regulation G Reconciliations” for further discussion of Net Income (Loss), As Adjusted. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2014 | 2013 | Variance | 2014 | 2013 | Variance | |||||||||||||||||||
West | $ | 228 | $ | 198 | $ | 30 | $ | 430 | $ | 400 | $ | 30 | ||||||||||||
Texas | 177 | 133 | 44 | 298 | 209 | 89 | ||||||||||||||||||
North | 175 | 159 | 16 | 442 | 301 | 141 | ||||||||||||||||||
Southeast | 52 | 43 | 9 | 107 | 84 | 23 | ||||||||||||||||||
Total | $ | 632 | $ | 533 | $ | 99 | $ | 1,277 | $ | 994 | $ | 283 |
+ | the commencement of commercial operations at our contracted Russell City and Los Esteros power plants during the third quarter of 2013 and |
+ | higher spark spreads due to stronger market conditions resulting from lower hydroelectric generation, partially offset by |
– | the expiration of a tolling contract associated with our Delta Energy Center in December 2013 and |
– | lower contribution from hedges. |
+ | higher spark spreads resulting from stronger market conditions in April and May 2014 |
+ | the acquisition of Guadalupe Energy Center in February 2014 and the expansions of our Deer Park and Channel Energy Centers, which were completed in June 2014 and |
+ | higher contribution from hedges, partially offset by |
– | lower spark spreads resulting from weaker market conditions in June 2014. |
+ | higher spark spreads resulting from stronger market conditions in the first five months of 2014 |
+ | the acquisition of Guadalupe Energy Center in February 2014 and the expansions of our Deer Park and Channel Energy Centers, which were completed in June 2014. |
+ | higher spark spreads resulting from stronger market conditions due to colder than normal weather during the first quarter of 2014 |
+ | higher contribution from our dual-fueled plants during the first quarter of 2014 when fuel oil prices were lower than natural gas prices and |
+ | higher regulatory capacity revenues, partially offset by |
– | lower contribution from hedges. |
+ | higher spark spreads resulting from stronger market conditions and |
+ | positive impact of new contracts which became effective in 2014. |
+ | higher spark spreads resulting from stronger market conditions due to colder than normal weather during the first quarter of 2014 and |
+ | positive impact of new contracts which became effective in 2014, partially offset by |
– | lower contribution from hedges. |
June 30, | December 31, | |||||||
2014 | 2013 | |||||||
(in millions) | ||||||||
Cash and cash equivalents, corporate(1) | $ | 286 | $ | 649 | ||||
Cash and cash equivalents, non-corporate | 156 | 292 | ||||||
Total cash and cash equivalents | 442 | 941 | ||||||
Restricted cash | 257 | 272 | ||||||
Corporate Revolving Facility availability | 765 | 758 | ||||||
CDHI letter of credit availability | 6 | 7 | ||||||
Total current liquidity availability | $ | 1,470 | $ | 1,978 |
(1) | Includes $184 million and $5 million of margin deposits posted with us by our counterparties at June 30, 2014, and December 31, 2013, respectively. |
Six Months Ended June 30, | |||||||
2014 | 2013 | ||||||
(in millions) | |||||||
Beginning cash and cash equivalents | $ | 941 | $ | 1,284 | |||
Net cash provided by (used in): | |||||||
Operating activities | 349 | (175 | ) | ||||
Investing activities | (900 | ) | (281 | ) | |||
Financing activities | 52 | (113 | ) | ||||
Net decrease in cash and cash equivalents | (499 | ) | (569 | ) | |||
Ending cash and cash equivalents | $ | 442 | $ | 715 |
• | Safety Performance: |
— | Maintained top quartile7 safety metrics: 0.83 Total Recordable Incident Rate year-to-date |
— | No lost-time incidents year-to-date, a record low |
• | Availability Performance: |
— | Achieved record-low fleetwide forced outage factor: 1.5% |
— | Delivered record-high fleetwide starting reliability: 99% |
• | Power Generation: |
— | Provided approximately 1.5 million MWh of renewable baseload generation from our Geysers geothermal plants |
— | Successfully brought online additional efficient natural gas-fired capacity upon completion of expansions at Deer Park and Channel Energy Centers |
— | Channel Energy Center: 100% starting reliability and 0% forced outage factor |
• | Customer-oriented Growth: |
— | Entered into a new ten-year PPA, subject to approval by the CPUC, with Southern California Edison to provide 225 MW of capacity and renewable energy from our Geysers assets commencing in June 2017 |
— | Entered into a new five-year PPA with Dairyland Power Cooperative to provide capacity and energy from our RockGen Energy Center commencing in June 2018. The capacity under contract will initially be 135 MW, then will increase to 235 MW for the final four years of the contract |
— | Entered into a new six-year PPA with the City of San Marcos to provide power from our Texas power plant fleet commencing in July 2015 |
— | Entered into a new two-year PPA with Pedernales Electric Cooperative to provide approximately 70 MW of power from our Texas power plant fleet commencing in August 2016 |
Full Year 2014 | |||
Adjusted EBITDA | $ | 1,900 - 2,000 | |
Less: | |||
Operating lease payments | 35 | ||
Major maintenance expense and maintenance capital expenditures(1) | 380 | ||
Cash interest, net(2) | 675 | ||
Cash taxes | 20 | ||
Other | 5 | ||
Adjusted Free Cash Flow | $ | 785 - 885 | |
Per Share Estimate (diluted) | $ | 1.85 - 2.10 | |
Debt amortization | $ | (200 | ) |
Growth capital expenditures (net of debt funding) | $ | (300 | ) |
Guadalupe Energy Center acquisition (net of debt funding) | $ | (244 | ) |
(1) | Includes projected major maintenance expense of $220 million and maintenance capital expenditures of $160 million. Capital expenditures exclude major construction and development projects. |
(2) | Includes commitment, letter of credit and other bank fees from both consolidated and unconsolidated investments, net of capitalized interest and interest income. |
• | Financial results that may be volatile and may not reflect historical trends due to, among other things, seasonality of demand, fluctuations in prices for commodities such as natural gas and power, changes in U.S. macroeconomic conditions, fluctuations in liquidity and volatility in the energy commodities markets and our ability to hedge risks; |
• | Laws, regulation and market rules in the markets in which we participate and our ability to effectively respond to changes in laws, regulations or market rules or the interpretation thereof including those related to the environment, derivative transactions and market design in the regions in which we operate; |
• | Our ability to manage our liquidity needs and to comply with covenants under our First Lien Notes, Senior Unsecured Notes, Corporate Revolving Facility, First Lien Term Loans, CCFC Term Loans and other existing financing obligations; |
• | Risks associated with the operation, construction and development of power plants including unscheduled outages or delays and plant efficiencies; |
• | Risks related to our geothermal resources, including the adequacy of our steam reserves, unusual or unexpected steam field well and pipeline maintenance requirements, variables associated with the injection of water to the steam reservoir and potential regulations or other requirements related to seismicity concerns that may delay or increase the cost of developing or operating geothermal resources; |
• | The unknown future impact on our business from the Dodd-Frank Act and the rules to be promulgated thereunder; |
• | Competition, including risks associated with marketing and selling power in the evolving energy markets; |
• | Structural changes in the supply and demand of power, resulting from the development of new fuels or technologies and demand-side management tools; |
• | The expiration or early termination of our PPAs and the related results on revenues; |
• | Future capacity revenues may not occur at expected levels; |
• | Natural disasters, such as hurricanes, earthquakes and floods, acts of terrorism or cyber attacks that may impact our power plants or the markets our power plants serve and our corporate headquarters; |
• | Disruptions in or limitations on the transportation of natural gas, fuel oil and transmission of power; |
• | Our ability to manage our customer and counterparty exposure and credit risk, including our commodity positions; |
• | Our ability to attract, motivate and retain key employees; |
• | Present and possible future claims, litigation and enforcement actions; and |
• | Other risks identified in this press release and in our 2013 Form 10-K. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2014 | 2013 | 2014 | 2013 | ||||||||||||
(in millions, except share and per share amounts) | |||||||||||||||
Operating revenues: | |||||||||||||||
Commodity revenue | $ | 1,766 | $ | 1,539 | $ | 3,814 | $ | 2,847 | |||||||
Mark-to-market gain (loss) | 169 | 31 | 83 | (40 | ) | ||||||||||
Other revenue | 4 | 2 | 7 | 6 | |||||||||||
Operating revenues | 1,939 | 1,572 | 3,904 | 2,813 | |||||||||||
Operating expenses: | |||||||||||||||
Fuel and purchased energy expense: | |||||||||||||||
Commodity expense | 1,106 | 998 | 2,476 | 1,833 | |||||||||||
Mark-to-market (gain) loss | 28 | 2 | 15 | (12 | ) | ||||||||||
Fuel and purchased energy expense | 1,134 | 1,000 | 2,491 | 1,821 | |||||||||||
Plant operating expense | 274 | 257 | 539 | 484 | |||||||||||
Depreciation and amortization expense | 147 | 145 | 300 | 291 | |||||||||||
Sales, general and other administrative expense | 38 | 36 | 71 | 69 | |||||||||||
Other operating expenses | 21 | 20 | 43 | 38 | |||||||||||
Total operating expenses | 1,614 | 1,458 | 3,444 | 2,703 | |||||||||||
(Income) from unconsolidated investments in power plants | (4 | ) | (8 | ) | (13 | ) | (16 | ) | |||||||
Income from operations | 329 | 122 | 473 | 126 | |||||||||||
Interest expense | 169 | 170 | 335 | 346 | |||||||||||
Interest (income) | (2 | ) | (1 | ) | (3 | ) | (3 | ) | |||||||
Debt extinguishment costs | — | 68 | 1 | 68 | |||||||||||
Other (income) expense, net | 6 | 3 | 16 | 8 | |||||||||||
Income (loss) before income taxes | 156 | (118 | ) | 124 | (293 | ) | |||||||||
Income tax expense (benefit) | 15 | (48 | ) | (4 | ) | (98 | ) | ||||||||
Net income (loss) | 141 | (70 | ) | 128 | (195 | ) | |||||||||
Net income attributable to the noncontrolling interest | (2 | ) | — | (6 | ) | — | |||||||||
Net income (loss) attributable to Calpine | $ | 139 | $ | (70 | ) | $ | 122 | $ | (195 | ) |
Basic earnings (loss) per common share attributable to Calpine: | |||||||||||||||
Weighted average shares of common stock outstanding (in thousands) | 416,507 | 447,558 | 418,296 | 449,620 | |||||||||||
Net income (loss) per common share attributable to Calpine — basic | $ | 0.33 | $ | (0.16 | ) | $ | 0.29 | $ | (0.43 | ) | |||||
Diluted earnings (loss) per common share attributable to Calpine: | |||||||||||||||
Weighted average shares of common stock outstanding (in thousands) | 421,348 | 447,558 | 422,697 | 449,620 | |||||||||||
Net income (loss) per common share attributable to Calpine — diluted | $ | 0.33 | $ | (0.16 | ) | $ | 0.29 | $ | (0.43 | ) |
June 30, | December 31, | ||||||
2014 | 2013 | ||||||
(in millions, except share and per share amounts) | |||||||
ASSETS | |||||||
Current assets: | |||||||
Cash and cash equivalents | $ | 442 | $ | 941 | |||
Accounts receivable, net of allowance of $7 and $5 | 762 | 552 | |||||
Inventories | 374 | 364 | |||||
Margin deposits and other prepaid expense | 303 | 309 | |||||
Restricted cash, current | 191 | 203 | |||||
Derivative assets, current | 746 | 445 | |||||
Current assets held for sale | 808 | — | |||||
Other current assets | 76 | 42 | |||||
Total current assets | 3,702 | 2,856 | |||||
Property, plant and equipment, net | 12,844 | 12,995 | |||||
Restricted cash, net of current portion | 66 | 69 | |||||
Investments in power plants | 92 | 93 | |||||
Long-term derivative assets | 236 | 105 | |||||
Other assets | 430 | 441 | |||||
Total assets | $ | 17,370 | $ | 16,559 | |||
LIABILITIES & STOCKHOLDERS’ EQUITY | |||||||
Current liabilities: | |||||||
Accounts payable | $ | 614 | $ | 462 | |||
Accrued interest payable | 189 | 162 | |||||
Debt, current portion | 189 | 204 | |||||
Derivative liabilities, current | 706 | 451 | |||||
Current liabilities held for sale | 9 | — | |||||
Other current liabilities | 439 | 252 | |||||
Total current liabilities | 2,146 | 1,531 | |||||
Debt, net of current portion | 11,260 | 10,908 | |||||
Long-term derivative liabilities | 248 | 243 | |||||
Other long-term liabilities | 302 | 309 | |||||
Total liabilities | 13,956 | 12,991 | |||||
Commitments and contingencies | |||||||
Stockholders’ equity: | |||||||
Preferred stock, $0.001 par value per share; authorized 100,000,000 shares, none issued and outstanding | — | — | |||||
Common stock, $0.001 par value per share; authorized 1,400,000,000 shares, 500,563,630 and 497,841,056 shares issued, respectively, and 417,133,226 and 429,038,988 shares outstanding, respectively | 1 | 1 | |||||
Treasury stock, at cost, 83,430,404 and 68,802,068 shares, respectively | (1,535 | ) | (1,230 | ) | |||
Additional paid-in capital | 12,421 | 12,389 | |||||
Accumulated deficit | (7,364 | ) | (7,486 | ) | |||
Accumulated other comprehensive loss | (168 | ) | (160 | ) | |||
Total Calpine stockholders’ equity | 3,355 | 3,514 | |||||
Noncontrolling interest | 59 | 54 | |||||
Total stockholders’ equity | 3,414 | 3,568 | |||||
Total liabilities and stockholders’ equity | $ | 17,370 | $ | 16,559 |
Six Months Ended June 30, | ||||||||
2014 | 2013 | |||||||
(in millions) | ||||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | 128 | $ | (195 | ) | |||
Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
Depreciation and amortization expense(1) | 322 | 315 | ||||||
Debt extinguishment costs | 1 | 28 | ||||||
Deferred income taxes | (12 | ) | (15 | ) | ||||
Mark-to-market activity, net | (70 | ) | 24 | |||||
(Income) from unconsolidated investments in power plants | (13 | ) | (16 | ) | ||||
Return on unconsolidated investments in power plants | 13 | 16 | ||||||
Stock-based compensation expense | 22 | 20 | ||||||
Other | 1 | — | ||||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable | (212 | ) | (285 | ) | ||||
Derivative instruments, net | (109 | ) | 1 | |||||
Other assets | (40 | ) | (182 | ) | ||||
Accounts payable and accrued expenses | 378 | 67 | ||||||
Other liabilities | (60 | ) | 47 | |||||
Net cash provided by (used in) operating activities | 349 | (175 | ) | |||||
Cash flows from investing activities: | ||||||||
Purchases of property, plant and equipment | (258 | ) | (335 | ) | ||||
Purchase of Guadalupe Energy Center, net of cash | (656 | ) | — | |||||
Decrease in restricted cash | 14 | 55 | ||||||
Other | — | (1 | ) | |||||
Net cash used in investing activities | $ | (900 | ) | $ | (281 | ) |
Six Months Ended June 30, | ||||||||
2014 | 2013 | |||||||
(in millions) | ||||||||
Cash flows from financing activities: | ||||||||
Borrowings under CCFC Term Loans | $ | 420 | $ | 1,197 | ||||
Repayment of CCFC Term Loans, CCFC Notes and First Lien Term Loans | (23 | ) | (1,012 | ) | ||||
Borrowings from project financing, notes payable and other | 2 | 116 | ||||||
Repayments of project financing, notes payable and other | (55 | ) | (43 | ) | ||||
Financing costs | (10 | ) | (27 | ) | ||||
Stock repurchases | (297 | ) | (362 | ) | ||||
Proceeds from exercises of stock options | 15 | 17 | ||||||
Other | — | 1 | ||||||
Net cash provided by (used in) financing activities | 52 | (113 | ) | |||||
Net decrease in cash and cash equivalents | (499 | ) | (569 | ) | ||||
Cash and cash equivalents, beginning of period | 941 | 1,284 | ||||||
Cash and cash equivalents, end of period | $ | 442 | $ | 715 | ||||
Cash paid during the period for: | ||||||||
Interest, net of amounts capitalized | $ | 288 | $ | 334 | ||||
Income taxes | $ | 16 | $ | 21 | ||||
Supplemental disclosure of non-cash investing activities: | ||||||||
Change in capital expenditures included in accounts payable | $ | 13 | $ | 17 |
(1) | Includes depreciation and amortization included in fuel and purchased energy expense and interest expense on our Consolidated Condensed Statements of Operations. |
Three Months Ended June 30, 2014 | ||||||||||||||||||||||||
Consolidation | ||||||||||||||||||||||||
And | ||||||||||||||||||||||||
West | Texas | North | Southeast | Elimination | Total | |||||||||||||||||||
Commodity Margin(1) | $ | 228 | $ | 177 | $ | 175 | $ | 52 | $ | — | $ | 632 | ||||||||||||
Add: Mark-to-market commodity activity, net and other(2) | 21 | 184 | (23 | ) | (1 | ) | (8 | ) | 173 | |||||||||||||||
Less: | ||||||||||||||||||||||||
Plant operating expense | 95 | 83 | 65 | 38 | (7 | ) | 274 | |||||||||||||||||
Depreciation and amortization expense | 58 | 48 | 32 | 8 | 1 | 147 | ||||||||||||||||||
Sales, general and other administrative expense | 7 | 18 | 6 | 6 | 1 | 38 | ||||||||||||||||||
Other operating expenses | 15 | 1 | 8 | 1 | (4 | ) | 21 | |||||||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (4 | ) | — | — | (4 | ) | ||||||||||||||||
Income (loss) from operations | $ | 74 | $ | 211 | $ | 45 | $ | (2 | ) | $ | 1 | $ | 329 |
Three Months Ended June 30, 2013 | ||||||||||||||||||||||||
Consolidation | ||||||||||||||||||||||||
And | ||||||||||||||||||||||||
West | Texas | North | Southeast | Elimination | Total | |||||||||||||||||||
Commodity Margin(1) | $ | 198 | $ | 133 | $ | 159 | $ | 43 | $ | — | $ | 533 | ||||||||||||
Add: Mark-to-market commodity activity, net and other(2) | 19 | 34 | (12 | ) | 7 | (9 | ) | 39 | ||||||||||||||||
Less: | ||||||||||||||||||||||||
Plant operating expense | 92 | 93 | 46 | 34 | (8 | ) | 257 | |||||||||||||||||
Depreciation and amortization expense | 53 | 42 | 32 | 18 | — | 145 | ||||||||||||||||||
Sales, general and other administrative expense | 8 | 16 | 6 | 6 | — | 36 | ||||||||||||||||||
Other operating expenses | 12 | 1 | 7 | 1 | (1 | ) | 20 | |||||||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (8 | ) | — | — | (8 | ) | ||||||||||||||||
Income (loss) from operations | $ | 52 | $ | 15 | $ | 64 | $ | (9 | ) | $ | — | $ | 122 |
Six Months Ended June 30, 2014 | ||||||||||||||||||||||||
Consolidation | ||||||||||||||||||||||||
And | ||||||||||||||||||||||||
West | Texas | North | Southeast | Elimination | Total | |||||||||||||||||||
Commodity Margin(3) | $ | 430 | $ | 298 | $ | 442 | $ | 107 | $ | — | $ | 1,277 | ||||||||||||
Add: Mark-to-market commodity activity, net and other(4) | 50 | 138 | (40 | ) | 5 | (17 | ) | 136 | ||||||||||||||||
Less: | ||||||||||||||||||||||||
Plant operating expense | 200 | 173 | 117 | 65 | (16 | ) | 539 | |||||||||||||||||
Depreciation and amortization expense | 118 | 90 | 65 | 26 | 1 | 300 | ||||||||||||||||||
Sales, general and other administrative expense | 17 | 30 | 12 | 12 | — | 71 | ||||||||||||||||||
Other operating expenses | 27 | 3 | 14 | 2 | (3 | ) | 43 | |||||||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (13 | ) | — | — | (13 | ) | ||||||||||||||||
Income from operations | $ | 118 | $ | 140 | $ | 207 | $ | 7 | $ | 1 | $ | 473 |
Six Months Ended June 30, 2013 | ||||||||||||||||||||||||
Consolidation | ||||||||||||||||||||||||
And | ||||||||||||||||||||||||
West | Texas | North | Southeast | Elimination | Total | |||||||||||||||||||
Commodity Margin(3) | $ | 400 | $ | 209 | $ | 301 | $ | 84 | $ | — | $ | 994 | ||||||||||||
Add: Mark-to-market commodity activity, net and other(4) | (18 | ) | 23 | (5 | ) | 14 | (16 | ) | (2 | ) | ||||||||||||||
Less: | ||||||||||||||||||||||||
Plant operating expense | 187 | 158 | 89 | 65 | (15 | ) | 484 | |||||||||||||||||
Depreciation and amortization expense | 106 | 84 | 65 | 37 | (1 | ) | 291 | |||||||||||||||||
Sales, general and other administrative expense | 15 | 30 | 12 | 12 | — | 69 | ||||||||||||||||||
Other operating expenses | 21 | 2 | 14 | 2 | (1 | ) | 38 | |||||||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (16 | ) | — | — | (16 | ) | ||||||||||||||||
Income (loss) from operations | $ | 53 | $ | (42 | ) | $ | 132 | $ | (18 | ) | $ | 1 | $ | 126 |
(1) | Our Southeast segment includes Commodity Margin of $42 million and $32 million for the three months ended June 30, 2014 and 2013, respectively, related to the six power plants in our Southeast segment that were sold in July 2014. |
(2) | Includes $(27) million and $(11) million of lease levelization and $3 million and $3 million of amortization expense for the three months ended June 30, 2014 and 2013, respectively. |
(3) | Our Southeast segment includes Commodity Margin of $81 million and $57 million for the six months ended June 30, 2014 and 2013, respectively, related to the six power plants in our Southeast segment that were sold in July 2014. |
(4) | Includes $(56) million and $(27) million of lease levelization and $7 million and $7 million of amortization expense for the six months ended June 30, 2014 and 2013, respectively. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014(1) | 2013 | 2014(2) | 2013 | |||||||||||||
(in millions) | (in millions) | |||||||||||||||
Net income (loss) attributable to Calpine | $ | 139 | $ | (70 | ) | $ | 122 | $ | (195 | ) | ||||||
Net income attributable to the noncontrolling interest | 2 | — | 6 | — | ||||||||||||
Income tax expense (benefit) | 15 | (48 | ) | (4 | ) | (98 | ) | |||||||||
Debt extinguishment costs and other (income) expense, net | 6 | 71 | 17 | 76 | ||||||||||||
Interest expense, net of interest income | 167 | 169 | 332 | 343 | ||||||||||||
Income from operations | $ | 329 | $ | 122 | $ | 473 | $ | 126 | ||||||||
Add: | ||||||||||||||||
Adjustments to reconcile income from operations to Adjusted EBITDA: | ||||||||||||||||
Depreciation and amortization expense, excluding deferred financing costs(3) | 146 | 146 | 297 | 292 | ||||||||||||
Major maintenance expense | 72 | 83 | 153 | 149 | ||||||||||||
Operating lease expense | 8 | 8 | 17 | 17 | ||||||||||||
Mark-to-market (gain) loss on commodity derivative activity | (141 | ) | (29 | ) | (68 | ) | 28 | |||||||||
Adjustments to reflect Adjusted EBITDA from unconsolidated investments and exclude the noncontrolling interest(4) | 6 | 7 | 9 | 13 | ||||||||||||
Stock-based compensation expense | 12 | 12 | 22 | 20 | ||||||||||||
Loss on dispositions of assets | 1 | 2 | 1 | 4 | ||||||||||||
Acquired contract amortization | 3 | 3 | 7 | 7 | ||||||||||||
Other | (23 | ) | (11 | ) | (52 | ) | (27 | ) | ||||||||
Total Adjusted EBITDA | $ | 413 | $ | 343 | $ | 859 | $ | 629 | ||||||||
Less: | ||||||||||||||||
Operating lease payments | 8 | 8 | 17 | 17 | ||||||||||||
Major maintenance expense and capital expenditures(5) | 126 | 105 | 259 | 241 | ||||||||||||
Cash interest, net(6) | 169 | 175 | 337 | 355 | ||||||||||||
Cash taxes | 8 | 14 | 14 | 17 | ||||||||||||
Other | 3 | 3 | 3 | 4 | ||||||||||||
Adjusted Free Cash Flow(7) | $ | 99 | $ | 38 | $ | 229 | $ | (5 | ) | |||||||
Weighted average shares of common stock outstanding (diluted, in thousands) | 421,348 | 447,558 | 422,697 | 449,620 | ||||||||||||
Adjusted Free Cash Flow Per Share (diluted) | $ | 0.23 | $ | 0.08 | $ | 0.54 | $ | (0.01 | ) |
(1) | Our Southeast segment includes Adjusted EBITDA of $23 million and $15 million for the three months ended June 30, 2014 and 2013, respectively, related to the six power plants in our Southeast segment that were sold in July 2014. |
(2) | Our Southeast segment includes Adjusted EBITDA of $43 million and $21 million for the six months ended June 30, 2014 and 2013, respectively, related to the six power plants in our Southeast segment that were sold in July 2014. |
(3) | Depreciation and amortization expense in the income from operations calculation on our Consolidated Condensed Statements of Operations excludes amortization of other assets. |
(4) | Adjustments to reflect Adjusted EBITDA from unconsolidated investments include (gain) loss on mark-to-market activity of nil for each of the three and six months ended June 30, 2014 and 2013. |
(5) | Includes $73 million and $156 million in major maintenance expense for the three and six months ended June 30, 2014, respectively, and $53 million and $103 million in maintenance capital expenditure for the three and six months ended June 30, 2014, respectively. Includes $85 million and $151 million in major maintenance expense for the three and six months ended June 30, 2013, respectively, and $20 million and $90 million in maintenance capital expenditure for the three and six months ended June 30, 2013, respectively. |
(6) | Includes commitment, letter of credit and other bank fees from both consolidated and unconsolidated investments, net of capitalized interest and interest income. |
(7) | Excludes an increase in working capital of $36 million and $42 million for the three and six months ended June 30, 2014, respectively, and an increase in working capital of $112 million and $206 million for the three and six months ended June 30, 2013, respectively. Adjusted Free Cash Flow, as reported, excludes changes in working capital, such that it is calculated on the same basis as our guidance. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||||||
(in millions) | (in millions) | |||||||||||||||
Commodity Margin | $ | 632 | $ | 533 | $ | 1,277 | $ | 994 | ||||||||
Other revenue | 4 | 3 | 7 | 6 | ||||||||||||
Plant operating expense(1) | (191 | ) | (166 | ) | (368 | ) | (320 | ) | ||||||||
Sales, general and administrative expense(2) | (31 | ) | (30 | ) | (60 | ) | (59 | ) | ||||||||
Other operating expenses(3) | (12 | ) | (11 | ) | (24 | ) | (21 | ) | ||||||||
Adjusted EBITDA from unconsolidated investments in power plants(4) | 12 | 14 | 28 | 29 | ||||||||||||
Other | (1 | ) | — | (1 | ) | — | ||||||||||
Adjusted EBITDA | $ | 413 | $ | 343 | $ | 859 | $ | 629 |
(1) | Shown net of major maintenance expense, stock-based compensation expense, non-cash loss on dispositions of assets and other costs. |
(2) | Shown net of stock-based compensation expense and other costs. |
(3) | Shown net of operating lease expense, amortization and other costs. |
(4) | Amount is composed of income from unconsolidated investments in power plants, as well as adjustments to reflect Adjusted EBITDA from unconsolidated investments. |
Full Year 2014 Range: | Low | High | ||||
(in millions) | ||||||
GAAP Net Income (1) | $ | 680 | $ | 780 | ||
Plus: | ||||||
Debt extinguishment costs | 340 | 340 | ||||
Interest expense, net of interest income | 675 | 675 | ||||
Depreciation and amortization expense | 610 | 610 | ||||
Major maintenance expense | 215 | 215 | ||||
Operating lease expense | 35 | 35 | ||||
Gain on sale of assets, net | (750 | ) | (750 | ) | ||
Other(2) | 95 | 95 | ||||
Adjusted EBITDA | $ | 1,900 | $ | 2,000 | ||
Less: | ||||||
Operating lease payments | 35 | 35 | ||||
Major maintenance expense and maintenance capital expenditures(3) | 380 | 380 | ||||
Cash interest, net(4) | 675 | 675 | ||||
Cash taxes | 20 | 20 | ||||
Other | 5 | 5 | ||||
Adjusted Free Cash Flow | $ | 785 | $ | 885 | ||
(1) | For purposes of Net Income guidance reconciliation, mark-to-market adjustments are assumed to be nil. |
(2) | Other includes stock-based compensation expense, adjustments to reflect Adjusted EBITDA from unconsolidated investments, income tax expense and other items. |
(3) | Includes projected major maintenance expense of $220 million and maintenance capital expenditures of $160 million. Capital expenditures exclude major construction and development projects. |
(4) | Includes commitment, letter of credit and other bank fees from both consolidated and unconsolidated investments, net of capitalized interest and interest income. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
2014 | 2013 | 2014 | 2013 | |||||||||
Total MWh generated (in thousands)(1) | 23,085 | 22,339 | 46,062 | 46,337 | ||||||||
West | 6,770 | 7,229 | 15,601 | 15,566 | ||||||||
Texas | 9,489 | 7,270 | 16,366 | 15,300 | ||||||||
North | 3,332 | 4,067 | 6,977 | 7,976 | ||||||||
Southeast | 3,494 | 3,773 | 7,118 | 7,495 | ||||||||
Average availability | 88.1 | % | 88.2 | % | 88.3 | % | 89.2 | % | ||||
West | 91.6 | % | 88.8 | % | 90.3 | % | 88.7 | % | ||||
Texas | 90.8 | % | 83.5 | % | 86.9 | % | 85.4 | % | ||||
North | 79.0 | % | 88.2 | % | 83.6 | % | 90.2 | % | ||||
Southeast | 89.9 | % | 95.2 | % | 93.8 | % | 94.7 | % | ||||
Average capacity factor, excluding peakers | 41.7 | % | 43.4 | % | 42.4 | % | 45.5 | % | ||||
West | 44.0 | % | 52.5 | % | 51.1 | % | 57.0 | % | ||||
Texas | 48.9 | % | 42.8 | % | 44.2 | % | 45.3 | % | ||||
North | 35.1 | % | 42.9 | % | 36.8 | % | 43.1 | % | ||||
Southeast | 31.2 | % | 33.7 | % | 32.0 | % | 33.7 | % | ||||
Steam adjusted heat rate (Btu/kWh) | 7,433 | 7,447 | 7,393 | 7,394 | ||||||||
West | 7,377 | 7,414 | 7,301 | 7,345 | ||||||||
Texas | 7,282 | 7,184 | 7,227 | 7,173 | ||||||||
North | 8,061 | 8,015 | 8,014 | 7,963 | ||||||||
Southeast | 7,368 | 7,429 | 7,373 | 7,349 |
(1) | Excludes generation from unconsolidated power plants and power plants owned but not operated by us. |