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 October 30, 2015.* |
* | Furnished herewith. |
By: | /s/ ZAMIR RAUF | |||
Zamir Rauf | ||||
Executive Vice President and | ||||
Chief Financial Officer | ||||
October 30, 2015 |
Exhibit No. | Description | |
99.1 | Calpine Corporation Press Release dated October 30, 2015.* |
* | 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2015 | 2014 | % Change | 2015 | 2014 | % Change | ||||||||||||||||
Operating Revenues | $ | 1,948 | $ | 2,187 | (10.9 | )% | $ | 5,036 | $ | 6,091 | (17.3 | )% | |||||||||
Commodity Margin | $ | 974 | $ | 944 | 3.2 | % | $ | 2,166 | $ | 2,221 | (2.5 | )% | |||||||||
Adjusted EBITDA | $ | 791 | $ | 745 | 6.2 | % | $ | 1,586 | $ | 1,604 | (1.1 | )% | |||||||||
Adjusted Free Cash Flow | $ | 576 | $ | 506 | 13.8 | % | $ | 745 | $ | 735 | 1.4 | % | |||||||||
Per Share (diluted) | $ | 1.61 | $ | 1.26 | 27.8 | % | $ | 2.02 | $ | 1.77 | 14.1 | % | |||||||||
Net Income1 | $ | 273 | $ | 614 | $ | 282 | $ | 736 | |||||||||||||
Per Share (diluted) | $ | 0.76 | $ | 1.52 | $ | 0.77 | $ | 1.77 | |||||||||||||
Net Income, As Adjusted2 | $ | 347 | $ | 306 | $ | 318 | $ | 359 |
2015 | 2016 | ||||
Adjusted EBITDA | $1,965 - 2,000 | $1,800 - 1,950 | |||
Adjusted Free Cash Flow | $825 - 860 | $710 - 860 | |||
Per Share Estimate (diluted) | $2.25 - 2.35 | $2.00 - 2.40 |
• | Power Operations: |
— | Generated a third quarter record of more than 33 million MWh3 |
— | Achieved low third quarter fleetwide forced outage factor: 1.8% |
— | Delivered strong fleetwide starting reliability: 98.6% |
• | Customer-Oriented Origination Efforts: |
— | Completed acquisition of leading retail provider Champion Energy for $240 million4 |
— | Executed a 238 MW one-year resource adequacy contract with Southern California Edison for our Pastoria Energy Center |
• | Capital Allocation Progress: |
— | Announced acquisition of Granite Ridge Energy Center, a combined-cycle power plant in New Hampshire with a nameplate capacity of 745 MW, for $500 million4, or approximately $671/kW |
— | Completed approximately $529 million of share repurchases year-to-date, reducing our share count by approximately 7%; an incremental $54 million since last call |
— | Issued notice of intent to redeem 10% of our 2023 First Lien Notes |
1 | Reported as Net Income attributable to Calpine on our Consolidated Condensed Statements of Operations. |
2 | Refer to Table 1 for further detail of Net Income, As Adjusted. |
3 | Includes generation from power plants owned but not operated by Calpine and our share of generation from unconsolidated power plants. |
4 | Excluding working capital adjustments. |
+ | the acquisition of our 731 MW Fore River Energy Center in November 2014 and the commencement of commercial operations at our 309 MW Garrison Energy Center in June 2015 |
+ | higher regulatory capacity revenue, and |
+ | higher settled spark spreads in Texas in July and August 2015 compared to the same months in 2014, partially offset by |
– | lower contribution from hedges and |
– | lower spark spreads in the West due to lower natural gas prices during the third quarter of 2015 compared to the third quarter of 2014. |
– | a significant decrease in power and natural gas prices in our East region in the first quarter of 2015 compared to the prior year period, given the unusually high price levels experienced during the polar vortex events in the first quarter of 2014 |
– | the net impact of our portfolio management activities, including the sale of six power plants with a total capacity of 3,498 MW in our East region in July 2014, the acquisition of our Guadalupe and Fore River Energy Centers in February and November 2014, respectively, the commencement of commercial operations at our Garrison Energy Center in June 2015 and the completion of the expansions of our Deer Park and Channel Energy Centers in June 2014, and |
– | lower regulatory capacity revenue in PJM, partially offset by |
+ | higher contribution from hedges that more than offset lower on-peak spark spreads across all of our regions, excluding the impact of the polar vortex events experienced during the first quarter of 2014, and |
+ | higher generation in Texas resulting from lower natural gas prices, which drove lower systemwide coal-fired generation during the nine months ended September 30, 2015. |
5 | Decrease in plant operating expense excludes changes in major maintenance expense, stock-based compensation expense, non-cash loss on disposition of assets and other costs. See the table titled “Consolidated Adjusted EBITDA Reconciliation” for the actual amounts of these items for the three and nine months ended September 30, 2015 and 2014. |
– | lower Commodity Margin, as previously discussed, and |
– | higher depreciation and amortization expense driven primarily by portfolio changes, partially offset by |
+ | lower plant operating expense as a result of portfolio changes, as well as a decrease in equipment failure costs related to outages and |
+ | lower interest expense due to a decrease in our annual effective interest rate. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Net income attributable to Calpine | $ | 273 | $ | 614 | $ | 282 | $ | 736 | ||||||||
Impairment losses(1) | — | 123 | — | 123 | ||||||||||||
(Gain) on sale of assets, net(1) | — | (753 | ) | — | (753 | ) | ||||||||||
Debt modification and extinguishment costs(1) | — | 340 | 32 | 341 | ||||||||||||
Mark-to-market (gain) loss on derivatives(1)(2) | 74 | (18 | ) | 4 | (88 | ) | ||||||||||
Net Income, As Adjusted(3) | $ | 347 | $ | 306 | $ | 318 | $ | 359 |
(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) | Non-GAAP financial measure, see “Regulation G Reconciliations” for further discussion of Net Income, As Adjusted. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2015 | 2014 | Variance | 2015 | 2014 | Variance | |||||||||||||||||||
West | $ | 385 | $ | 361 | $ | 24 | $ | 843 | $ | 791 | $ | 52 | ||||||||||||
Texas | 264 | 346 | (82 | ) | 583 | 644 | (61 | ) | ||||||||||||||||
East | 325 | 237 | 88 | 740 | 786 | (46 | ) | |||||||||||||||||
Total | $ | 974 | $ | 944 | $ | 30 | $ | 2,166 | $ | 2,221 | $ | (55 | ) |
+ | higher contribution from hedges and |
+ | increased generation resulting from a decrease in hydroelectric generation in the Pacific Northwest, partially offset by |
– | lower power prices and spark spreads resulting from lower natural gas prices |
– | the expiration of the operating lease related to our Greenleaf power plants in June 2015, and |
– | a wildfire in northern California in September 2015 that negatively impacted our Geysers assets. |
+ | higher contribution from hedges |
+ | increased generation resulting from a decrease in hydroelectric generation in the Pacific Northwest, and |
+ | higher renewable energy credit revenue associated with our Geysers assets resulting from more favorable pricing in 2015, partially offset by |
– | lower power prices and on-peak spark spreads resulting from lower natural gas prices |
– | the expiration of the operating lease related to our Greenleaf power plants in June 2015, and |
– | a wildfire in northern California in September 2015 that negatively impacted our Geysers assets. |
– | lower contribution from hedges, partially offset by |
+ | higher settled spark spreads in July and August 2015 compared to the same months in 2014 and |
+ | higher generation due to stronger market conditions and lower natural gas prices that drove lower systemwide coal-fired generation. |
– | lower contribution from summer hedges and |
– | lower on-peak spark spreads resulting from lower natural gas prices, partially offset by |
+ | the acquisition of Guadalupe Energy Center in February 2014 and the expansions of our Deer Park and Channel Energy Centers in June 2014, and |
+ | higher generation due to stronger market conditions and lower natural gas prices that drove lower systemwide coal-fired generation. |
+ | higher contribution from hedges |
+ | the acquisition of Fore River Energy Center in November 2014 and the commencement of commercial operations at our Garrison Energy Center in June 2015 |
+ | higher regulatory capacity revenues, and |
+ | a new contract on our Osprey Energy Center, which became effective in the fourth quarter of 2014. |
+ | higher contribution from hedges |
+ | the acquisition of Fore River Energy Center in November 2014 and the commencement of commercial operations at our Garrison Energy Center in June 2015 |
+ | higher generation driven by lower natural gas prices, and |
+ | a new contract on our Osprey Energy Center, which became effective in the fourth quarter of 2014, partially offset by |
– | a significant decrease in power and natural gas prices in the first quarter of 2015 compared to the prior year period, given the unusually high price levels experienced during the polar vortex events in the first quarter of 2014, and |
– | lower regulatory capacity revenues in PJM. |
September 30, 2015 | December 31, 2014 | |||||||
Cash and cash equivalents, corporate(1) | $ | 558 | $ | 460 | ||||
Cash and cash equivalents, non-corporate | 101 | 257 | ||||||
Total cash and cash equivalents | 659 | 717 | ||||||
Restricted cash | 275 | 244 | ||||||
Corporate Revolving Facility availability | 1,330 | 1,277 | ||||||
CDHI letter of credit facility availability | 62 | 86 | ||||||
Total current liquidity availability | $ | 2,326 | $ | 2,324 |
(1) | Includes $15 million and $47 million of margin deposits posted with us by our counterparties at September 30, 2015, and December 31, 2014, respectively. |
Nine Months Ended September 30, | |||||||
2015 | 2014 | ||||||
Beginning cash and cash equivalents | $ | 717 | $ | 941 | |||
Net cash provided by (used in): | |||||||
Operating activities | 548 | 504 | |||||
Investing activities | (450 | ) | 550 | ||||
Financing activities | (156 | ) | (466 | ) | |||
Net increase (decrease) in cash and cash equivalents | (58 | ) | 588 | ||||
Ending cash and cash equivalents | $ | 659 | $ | 1,529 |
6 | Based upon 490.6 million shares outstanding as of June 30, 2011, immediately prior to announcement of our repurchase program. |
• | Safety Performance: |
— | Maintained top quartile7 safety metrics: 0.54 total recordable incident rate |
• | Availability Performance: |
— | Achieved low fleetwide forced outage factor: 1.8% |
— | Delivered exceptional fleetwide starting reliability: 98.6% |
• | Power Generation: |
— | Seven gas-fired plants with third quarter capacity factors greater than 80%: Bosque, Hermiston, Morgan, Otay Mesa, Pasadena, Pastoria, Stony Brook |
— | Hermiston: 0% forced outage factor, 0 starts, 93% capacity factor |
• | In September 2015, a wildfire spread to our Geysers assets in Lake and Sonoma Counties, California, affecting five of our 14 power plants in the region which sustained damage to ancillary structures such as cooling towers and communication/electric deliverability infrastructure. The wildfire has since been contained, and our Geysers assets are generating renewable power for our customers at approximately three-quarters of the normal operating capacity. We expect our insurance program to cover the repair and replacement costs as well as our net revenue losses after deductibles are met. As a result, we do not anticipate that the wildfire will have a material impact on our financial condition, results of operations or cash flows. |
• | Customer-oriented Growth: |
— | Closed accretive acquisition of retail electric provider Champion Energy for $240 million4, consistent with our stated goal of getting closer to our end-use customers |
Full Year 2015 | Full Year 2016 | |||||
Adjusted EBITDA | $ | 1,965 - 2,000 | $ | 1,800 - 1,950 | ||
Less: | ||||||
Operating lease payments | 30 | 25 | ||||
Major maintenance expense and maintenance capital expenditures(1) | 460 | 410 | ||||
Cash interest, net(2) | 625 | 635 | ||||
Cash taxes | 20 | 15 | ||||
Other | 5 | 5 | ||||
Adjusted Free Cash Flow | $ | 825 - 860 | $ | 710 - 860 | ||
Per Share Estimate (diluted) | $ | 2.25 - 2.35 | $ | 2.00 - 2.40 | ||
Debt amortization and repayment (3) | $ | (460 | ) | $ | (210 | ) |
Growth capital expenditures (net of debt funding) | $ | (355 | ) | $ | (285 | ) |
Acquisition of Champion Energy(4) | $ | (240 | ) | $ | - | |
Acquisition of Granite Ridge Energy Center(4) | $ | - | $ | (500 | ) |
(1) | Includes projected major maintenance expense of $280 million and maintenance capital expenditures of $180 million in 2015 and major maintenance expense of $270 million and maintenance capital expenditures of $140 million in 2016. 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. |
(3) | 2015 amount includes scheduled amortization of approximately $193 million, the repurchase of approximately $147 million of our 2023 First Lien Notes in February 2015 and expected exercise of 10% call feature on 2023 First Lien Notes of approximately $120 million. |
(4) | Subject to working capital adjustments. Acquisition of Granite Ridge assumed to close on February 1, 2016, for purposes of guidance. |
• | 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 and extent to which we hedge risks; |
• | Laws, regulations 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, access the capital markets when necessary and 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; |
• | 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 (such as distributed generation, power storage and other technologies); |
• | 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, droughts, wildfires and floods, acts of terrorism or cyber attacks that may impact our power plants or the markets our power plants or retail operations 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 that may arise from noncompliance with market rules promulgated by the SEC, CFTC, FERC and other regulatory bodies; and |
• | Other risks identified in this press release, in our 2014 Form 10-K, in our Quarterly Report on Form 10Q for the quarter ended September 30, 2015, and in other reports filed by us with the SEC. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
(in millions, except share and per share amounts) | ||||||||||||||||
Operating revenues: | ||||||||||||||||
Commodity revenue | $ | 1,888 | $ | 2,186 | $ | 4,933 | $ | 6,000 | ||||||||
Mark-to-market gain (loss) | 55 | (2 | ) | 89 | 81 | |||||||||||
Other revenue | 5 | 3 | 14 | 10 | ||||||||||||
Operating revenues | 1,948 | 2,187 | 5,036 | 6,091 | ||||||||||||
Operating expenses: | ||||||||||||||||
Fuel and purchased energy expense: | ||||||||||||||||
Commodity expense | 943 | 1,281 | 2,754 | 3,757 | ||||||||||||
Mark-to-market (gain) loss | 130 | (13 | ) | 95 | 2 | |||||||||||
Fuel and purchased energy expense | 1,073 | 1,268 | 2,849 | 3,759 | ||||||||||||
Plant operating expense | 200 | 215 | 732 | 754 | ||||||||||||
Depreciation and amortization expense | 166 | 153 | 484 | 453 | ||||||||||||
Sales, general and other administrative expense | 33 | 37 | 100 | 108 | ||||||||||||
Other operating expenses | 16 | 23 | 56 | 66 | ||||||||||||
Total operating expenses | 1,488 | 1,696 | 4,221 | 5,140 | ||||||||||||
Impairment losses | — | 123 | — | 123 | ||||||||||||
(Gain) on sale of assets, net | — | (753 | ) | — | (753 | ) | ||||||||||
(Income) from unconsolidated investments in power plants | (6 | ) | (5 | ) | (18 | ) | (18 | ) | ||||||||
Income from operations | 466 | 1,126 | 833 | 1,599 | ||||||||||||
Interest expense | 159 | 156 | 471 | 491 | ||||||||||||
Interest (income) | (1 | ) | (2 | ) | (3 | ) | (5 | ) | ||||||||
Debt modification and extinguishment costs | — | 340 | 32 | 341 | ||||||||||||
Other (income) expense, net | 1 | 4 | 8 | 20 | ||||||||||||
Income before income taxes | 307 | 628 | 325 | 752 | ||||||||||||
Income tax expense | 28 | 9 | 32 | 5 | ||||||||||||
Net income | 279 | 619 | 293 | 747 | ||||||||||||
Net income attributable to the noncontrolling interest | (6 | ) | (5 | ) | (11 | ) | (11 | ) | ||||||||
Net income attributable to Calpine | $ | 273 | $ | 614 | $ | 282 | $ | 736 | ||||||||
Basic earnings per common share attributable to Calpine: | ||||||||||||||||
Weighted average shares of common stock outstanding (in thousands) | 355,443 | 398,232 | 365,053 | 411,534 | ||||||||||||
Net income per common share attributable to Calpine — basic | $ | 0.77 | $ | 1.54 | $ | 0.77 | $ | 1.79 | ||||||||
Diluted earnings per common share attributable to Calpine: | ||||||||||||||||
Weighted average shares of common stock outstanding (in thousands) | 357,676 | 402,962 | 368,219 | 416,056 | ||||||||||||
Net income per common share attributable to Calpine — diluted | $ | 0.76 | $ | 1.52 | $ | 0.77 | $ | 1.77 |
September 30, | December 31, | |||||||
2015 | 2014 | |||||||
(in millions, except share and per share amounts) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 659 | $ | 717 | ||||
Accounts receivable, net of allowance of $2 and $4 | 581 | 648 | ||||||
Inventories | 470 | 447 | ||||||
Margin deposits and other prepaid expense | 204 | 148 | ||||||
Restricted cash, current | 246 | 195 | ||||||
Derivative assets, current | 1,429 | 2,058 | ||||||
Other current assets | 9 | 7 | ||||||
Total current assets | 3,598 | 4,220 | ||||||
Property, plant and equipment, net | 12,984 | 13,190 | ||||||
Restricted cash, net of current portion | 29 | 49 | ||||||
Investments in power plants | 77 | 95 | ||||||
Long-term derivative assets | 718 | 439 | ||||||
Long-term assets held for sale | 130 | — | ||||||
Other assets | 362 | 385 | ||||||
Total assets | $ | 17,898 | $ | 18,378 | ||||
LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 446 | $ | 580 | ||||
Accrued interest payable | 137 | 165 | ||||||
Debt, current portion | 199 | 199 | ||||||
Derivative liabilities, current | 1,334 | 1,782 | ||||||
Other current liabilities | 307 | 473 | ||||||
Total current liabilities | 2,423 | 3,199 | ||||||
Debt, net of current portion | 11,465 | 11,083 | ||||||
Long-term derivative liabilities | 501 | 444 | ||||||
Other long-term liabilities | 298 | 221 | ||||||
Total liabilities | 14,687 | 14,947 | ||||||
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, 504,629,876 and 502,287,022 shares issued, respectively, and 357,831,952 and 381,921,264 shares outstanding, respectively | 1 | 1 | ||||||
Treasury stock, at cost, 146,797,924 and 120,365,758 shares, respectively | (2,867 | ) | (2,345 | ) | ||||
Additional paid-in capital | 12,470 | 12,440 | ||||||
Accumulated deficit | (6,258 | ) | (6,540 | ) | ||||
Accumulated other comprehensive loss | (193 | ) | (178 | ) | ||||
Total Calpine stockholders’ equity | 3,153 | 3,378 | ||||||
Noncontrolling interest | 58 | 53 | ||||||
Total stockholders’ equity | 3,211 | 3,431 | ||||||
Total liabilities and stockholders’ equity | $ | 17,898 | $ | 18,378 |
Nine Months Ended September 30, | ||||||||
2015 | 2014 | |||||||
(in millions) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 293 | $ | 747 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization expense(1) | 519 | 486 | ||||||
Debt extinguishment costs | — | 35 | ||||||
Deferred income taxes | 12 | (9 | ) | |||||
Impairment losses | — | 123 | ||||||
(Gain) on sale of assets, net | — | (753 | ) | |||||
Mark-to-market activity, net | 4 | (88 | ) | |||||
(Income) from unconsolidated investments in power plants | (18 | ) | (18 | ) | ||||
Return on unconsolidated investments in power plants | 23 | 13 | ||||||
Stock-based compensation expense | 19 | 30 | ||||||
Change in operating assets and liabilities: | ||||||||
Accounts receivable | 42 | (120 | ) | |||||
Derivative instruments, net | (44 | ) | (69 | ) | ||||
Other assets | (199 | ) | 54 | |||||
Accounts payable and accrued expenses | (211 | ) | 127 | |||||
Other liabilities | 108 | (54 | ) | |||||
Net cash provided by operating activities | 548 | 504 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property, plant and equipment | (411 | ) | (354 | ) | ||||
Proceeds from sale of power plants, interests and other | — | 1,573 | ||||||
Purchase of Guadalupe Energy Center | — | (656 | ) | |||||
Increase in restricted cash | (31 | ) | (15 | ) | ||||
Other | (8 | ) | 2 | |||||
Net cash provided by (used in) investing activities | $ | (450 | ) | $ | 550 |
Nine Months Ended September 30, | ||||||||
2015 | 2014 | |||||||
(in millions) | ||||||||
Cash flows from financing activities: | ||||||||
Borrowings under CCFC Term Loans and First Lien Term Loans | $ | 1,592 | $ | 420 | ||||
Repayment of CCFC Term Loans and First Lien Term Loans | (1,622 | ) | (34 | ) | ||||
Borrowings under Senior Unsecured Notes | 650 | 2,800 | ||||||
Repurchase of First Lien Notes | (147 | ) | (2,800 | ) | ||||
Borrowings from project financing, notes payable and other | — | 79 | ||||||
Repayments of project financing, notes payable and other | (102 | ) | (116 | ) | ||||
Distribution to noncontrolling interest holder | (6 | ) | (12 | ) | ||||
Financing costs | (17 | ) | (55 | ) | ||||
Stock repurchases | (510 | ) | (767 | ) | ||||
Proceeds from exercises of stock options | 6 | 19 | ||||||
Net cash used in financing activities | (156 | ) | (466 | ) | ||||
Net increase (decrease) in cash and cash equivalents | (58 | ) | 588 | |||||
Cash and cash equivalents, beginning of period | 717 | 941 | ||||||
Cash and cash equivalents, end of period | $ | 659 | $ | 1,529 | ||||
Cash paid during the period for: | ||||||||
Interest, net of amounts capitalized | $ | 465 | $ | 534 | ||||
Income taxes | $ | 19 | $ | 19 | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Change in capital expenditures included in accounts payable | $ | (17 | ) | $ | 8 | |||
Additions to property, plant and equipment through capital lease | $ | 9 | $ | — |
(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 September 30, 2015 | ||||||||||||||||||||
Consolidation | ||||||||||||||||||||
And | ||||||||||||||||||||
West | Texas | East | Elimination | Total | ||||||||||||||||
Commodity Margin | $ | 385 | $ | 264 | $ | 325 | $ | — | $ | 974 | ||||||||||
Add: Mark-to-market commodity activity, net and other(1) | 68 | (98 | ) | (62 | ) | (7 | ) | (99 | ) | |||||||||||
Less: | ||||||||||||||||||||
Plant operating expense | 87 | 62 | 57 | (6 | ) | 200 | ||||||||||||||
Depreciation and amortization expense | 61 | 58 | 48 | (1 | ) | 166 | ||||||||||||||
Sales, general and other administrative expense | 7 | 15 | 10 | 1 | 33 | |||||||||||||||
Other operating expenses | 8 | 2 | 8 | (2 | ) | 16 | ||||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (6 | ) | — | (6 | ) | |||||||||||||
Income from operations | $ | 290 | $ | 29 | $ | 146 | $ | 1 | $ | 466 |
Three Months Ended September 30, 2014 | ||||||||||||||||||||
Consolidation | ||||||||||||||||||||
And | ||||||||||||||||||||
West | Texas | East | Elimination | Total | ||||||||||||||||
Commodity Margin(2) | $ | 361 | $ | 346 | $ | 237 | $ | — | $ | 944 | ||||||||||
Add: Mark-to-market commodity activity, net and other(1) | 41 | (64 | ) | 4 | (6 | ) | (25 | ) | ||||||||||||
Less: | ||||||||||||||||||||
Plant operating expense | 91 | 77 | 55 | (8 | ) | 215 | ||||||||||||||
Depreciation and amortization expense | 65 | 51 | 38 | (1 | ) | 153 | ||||||||||||||
Sales, general and other administrative expense | 11 | 18 | 8 | — | 37 | |||||||||||||||
Other operating expenses | 12 | 1 | 6 | 4 | 23 | |||||||||||||||
Impairment losses | — | — | 123 | — | 123 | |||||||||||||||
(Gain) on sale of assets, net | — | — | (753 | ) | — | (753 | ) | |||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (5 | ) | — | (5 | ) | |||||||||||||
Income from operations | $ | 223 | $ | 135 | $ | 769 | $ | (1 | ) | $ | 1,126 |
Nine Months Ended September 30, 2015 | ||||||||||||||||||||
Consolidation | ||||||||||||||||||||
And | ||||||||||||||||||||
West | Texas | East | Elimination | Total | ||||||||||||||||
Commodity Margin | $ | 843 | $ | 583 | $ | 740 | $ | — | $ | 2,166 | ||||||||||
Add: Mark-to-market commodity activity, net and other(3) | 173 | (47 | ) | (84 | ) | (21 | ) | 21 | ||||||||||||
Less: | ||||||||||||||||||||
Plant operating expense | 313 | 233 | 206 | (20 | ) | 732 | ||||||||||||||
Depreciation and amortization expense | 193 | 157 | 135 | (1 | ) | 484 | ||||||||||||||
Sales, general and other administrative expense | 23 | 47 | 29 | 1 | 100 | |||||||||||||||
Other operating expenses | 28 | 6 | 24 | (2 | ) | 56 | ||||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (18 | ) | — | (18 | ) | |||||||||||||
Income from operations | $ | 459 | $ | 93 | $ | 280 | $ | 1 | $ | 833 |
Nine Months Ended September 30, 2014 | ||||||||||||||||||||
Consolidation | ||||||||||||||||||||
And | ||||||||||||||||||||
West | Texas | East | Elimination | Total | ||||||||||||||||
Commodity Margin(2) | $ | 791 | $ | 644 | $ | 786 | $ | — | $ | 2,221 | ||||||||||
Add: Mark-to-market commodity activity, net and other(3) | 91 | 74 | (31 | ) | (23 | ) | 111 | |||||||||||||
Less: | ||||||||||||||||||||
Plant operating expense | 291 | 250 | 237 | (24 | ) | 754 | ||||||||||||||
Depreciation and amortization expense | 183 | 141 | 129 | — | 453 | |||||||||||||||
Sales, general and other administrative expense | 28 | 48 | 32 | — | 108 | |||||||||||||||
Other operating expenses | 39 | 4 | 22 | 1 | 66 | |||||||||||||||
Impairment losses | — | — | 123 | — | 123 | |||||||||||||||
(Gain) on sale of assets, net | — | — | (753 | ) | — | (753 | ) | |||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (18 | ) | — | (18 | ) | |||||||||||||
Income from operations | $ | 341 | $ | 275 | $ | 983 | $ | — | $ | 1,599 |
(1) | Includes $41 million and $49 million of lease levelization and $4 million and $4 million of amortization expense for the three months ended September 30, 2015 and 2014, respectively. |
(2) | Commodity Margin related to the six power plants sold in our East segment on July 3, 2014, was not significant for the three months ended September 30, 2014. The Commodity Margin related to those power plants was $81 million for the nine months ended September 30, 2014. |
(3) | Includes $(1) million and $(7) million of lease levelization and $11 million and $11 million of amortization expense for the nine months ended September 30, 2015 and 2014, respectively. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2015 | 2014(6) | 2015 | 2014(6) | |||||||||||||
Net income attributable to Calpine | $ | 273 | $ | 614 | $ | 282 | $ | 736 | ||||||||
Net income attributable to the noncontrolling interest | 6 | 5 | 11 | 11 | ||||||||||||
Income tax expense | 28 | 9 | 32 | 5 | ||||||||||||
Debt modification and extinguishment costs and other (income) expense, net | 1 | 344 | 40 | 361 | ||||||||||||
Interest expense, net of interest income | 158 | 154 | 468 | 486 | ||||||||||||
Income from operations | $ | 466 | $ | 1,126 | $ | 833 | $ | 1,599 | ||||||||
Add: | ||||||||||||||||
Adjustments to reconcile income from operations to Adjusted EBITDA: | ||||||||||||||||
Depreciation and amortization expense, excluding deferred financing costs(1) | 164 | 152 | 480 | 449 | ||||||||||||
Major maintenance expense | 27 | 36 | 195 | 189 | ||||||||||||
Operating lease expense | 6 | 9 | 23 | 26 | ||||||||||||
Mark-to-market (gain) loss on commodity derivative activity | 75 | (11 | ) | 6 | (79 | ) | ||||||||||
Impairment losses | — | 123 | — | 123 | ||||||||||||
(Gain) on sale of assets | — | (753 | ) | — | (753 | ) | ||||||||||
Adjustments to reflect Adjusted EBITDA from unconsolidated investments and exclude the noncontrolling interest(2) | (3 | ) | (3 | ) | 6 | 6 | ||||||||||
Stock-based compensation expense | 7 | 8 | 19 | 30 | ||||||||||||
Loss on dispositions of assets | 5 | — | 8 | 1 | ||||||||||||
Acquired contract amortization | 4 | 4 | 11 | 11 | ||||||||||||
Other | 40 | 54 | 5 | 2 | ||||||||||||
Total Adjusted EBITDA | $ | 791 | $ | 745 | $ | 1,586 | $ | 1,604 | ||||||||
Less: | ||||||||||||||||
Operating lease payments | 6 | 9 | 23 | 26 | ||||||||||||
Major maintenance expense and capital expenditures(3) | 51 | 67 | 330 | 326 | ||||||||||||
Cash interest, net(4) | 156 | 160 | 468 | 497 | ||||||||||||
Cash taxes | 1 | 2 | 18 | 16 | ||||||||||||
Other | 1 | 1 | 2 | 4 | ||||||||||||
Adjusted Free Cash Flow(5) | $ | 576 | $ | 506 | $ | 745 | $ | 735 | ||||||||
Weighted average shares of common stock outstanding (diluted, in thousands) | 357,676 | 402,962 | 368,219 | 416,056 | ||||||||||||
Adjusted Free Cash Flow Per Share (diluted) | $ | 1.61 | $ | 1.26 | $ | 2.02 | $ | 1.77 |
(1) | Depreciation and amortization expense in the income from operations calculation on our Consolidated Condensed Statements of Operations excludes amortization of other assets. |
(2) | Adjustments to reflect Adjusted EBITDA from unconsolidated investments include (gain) loss on mark-to-market activity of nil for the three and nine months ended September 30, 2015 and 2014. |
(3) | Includes $29 million and $198 million in major maintenance expense for the three and nine months ended September 30, 2015, respectively, and $22 million and $132 million in maintenance capital expenditure for the three and nine months ended September 30, 2015, respectively. Includes $39 million and $195 million in major maintenance expense for the three and nine months ended September 30, 2014, respectively, and $28 million and $131 million in maintenance capital expenditure for the three and nine months ended September 30, 2014, respectively. |
(4) | Includes commitment, letter of credit and other bank fees from both consolidated and unconsolidated investments, net of capitalized interest and interest income. |
(5) | Excludes a decrease in working capital of $7 million and an increase of $244 million for the three and nine months ended September 30, 2015, respectively, and a decrease in working capital of $24 million and an increase of $18 million for the three and nine months ended September 30, 2014, respectively. Adjusted Free Cash Flow, as reported, excludes changes in working capital, such that it is calculated on the same basis as our guidance. |
(6) | Adjusted EBITDA related to the six power plants sold in our East segment on July 3, 2014, was nil and $43 million for the three and nine months ended September 30, 2014, respectively. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||||||
Commodity Margin | $ | 974 | $ | 944 | $ | 2,166 | $ | 2,221 | ||||||||
Other revenue | 4 | 3 | 13 | 10 | ||||||||||||
Plant operating expense(1) | (160 | ) | (171 | ) | (510 | ) | (539 | ) | ||||||||
Sales, general and administrative expense(2) | (31 | ) | (33 | ) | (93 | ) | (93 | ) | ||||||||
Other operating expenses(3) | (12 | ) | (12 | ) | (33 | ) | (36 | ) | ||||||||
Adjusted EBITDA from unconsolidated investments in power plants | 15 | 13 | 43 | 41 | ||||||||||||
Other | 1 | 1 | — | — | ||||||||||||
Adjusted EBITDA | $ | 791 | $ | 745 | $ | 1,586 | $ | 1,604 |
(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. |
Full Year 2015 Range: | Low | High | ||||
GAAP Net Income (1) | $ | 278 | $ | 313 | ||
Plus: | ||||||
Debt modification and extinguishment costs | 32 | 32 | ||||
Interest expense, net of interest income | 630 | 630 | ||||
Depreciation and amortization expense | 645 | 645 | ||||
Major maintenance expense | 275 | 275 | ||||
Operating lease expense | 30 | 30 | ||||
Other(2) | 75 | 75 | ||||
Adjusted EBITDA | $ | 1,965 | $ | 2,000 | ||
Less: | ||||||
Operating lease payments | 30 | 30 | ||||
Major maintenance expense and maintenance capital expenditures(3) | 460 | 460 | ||||
Cash interest, net(4) | 625 | 625 | ||||
Cash taxes | 20 | 20 | ||||
Other | 5 | 5 | ||||
Adjusted Free Cash Flow | $ | 825 | $ | 860 |
(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 $280 million and maintenance capital expenditures of $180 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. |
Full Year 2016 Range: | Low | High | ||||
GAAP Net Income (1) | $ | 165 | $ | 315 | ||
Plus: | ||||||
Debt modification and extinguishment costs | — | — | ||||
Interest expense, net of interest income | 640 | 640 | ||||
Depreciation and amortization expense | 610 | 610 | ||||
Major maintenance expense | 265 | 265 | ||||
Operating lease expense | 25 | 25 | ||||
Other(2) | 95 | 95 | ||||
Adjusted EBITDA | $ | 1,800 | $ | 1,950 | ||
Less: | ||||||
Operating lease payments | 25 | 25 | ||||
Major maintenance expense and maintenance capital expenditures(3) | 410 | 410 | ||||
Cash interest, net(4) | 635 | 635 | ||||
Cash taxes | 15 | 15 | ||||
Other | 5 | 5 | ||||
Adjusted Free Cash Flow | $ | 710 | $ | 860 |
(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 $270 million and maintenance capital expenditures of $140 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 September 30, | Nine Months Ended September 30, | |||||||||||
2015 | 2014 | 2015 | 2014 | |||||||||
Total MWh generated (in thousands)(1) | 32,583 | 28,449 | 85,104 | 74,511 | ||||||||
West | 10,117 | 9,634 | 25,800 | 25,235 | ||||||||
Texas | 13,576 | 11,924 | 36,314 | 28,290 | ||||||||
East | 8,890 | 6,891 | 22,990 | 20,986 | ||||||||
Average availability | 97.0 | % | 96.6 | % | 90.8 | % | 90.9 | % | ||||
West | 97.6 | % | 98.6 | % | 89.6 | % | 93.1 | % | ||||
Texas | 97.2 | % | 96.3 | % | 90.9 | % | 90.2 | % | ||||
East | 96.2 | % | 95.1 | % | 91.6 | % | 89.8 | % | ||||
Average capacity factor, excluding peakers | 63.3 | % | 57.7 | % | 56.3 | % | 47.1 | % | ||||
West | 66.0 | % | 61.9 | % | 56.1 | % | 54.7 | % | ||||
Texas | 66.9 | % | 58.8 | % | 60.3 | % | 49.4 | % | ||||
East | 55.8 | % | 50.8 | % | 50.9 | % | 38.0 | % | ||||
Steam adjusted heat rate (Btu/kWh) | 7,336 | 7,402 | 7,312 | 7,396 | ||||||||
West | 7,333 | 7,325 | 7,322 | 7,310 | ||||||||
Texas | 7,111 | 7,215 | 7,096 | 7,222 | ||||||||
East | 7,710 | 7,848 | 7,660 | 7,733 |
(1) | Excludes generation from unconsolidated power plants and power plants owned but not operated by us. |
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