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 July 29, 2016.* |
* | Furnished herewith. |
By: | /s/ ZAMIR RAUF | |||
Zamir Rauf | ||||
Executive Vice President and | ||||
Chief Financial Officer | ||||
July 29, 2016 |
Exhibit No. | Description | |
99.1 | Calpine Corporation Press Release dated July 29, 2016.* |
* | 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, | ||||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | ||||||||||||||||
Operating Revenues | $ | 1,164 | $ | 1,442 | (19.3 | )% | $ | 2,779 | $ | 3,088 | (10.0 | )% | |||||||||
Income from operations | $ | 140 | $ | 201 | (30.3 | )% | $ | 143 | $ | 367 | (61.0 | )% | |||||||||
Net Income (Loss)1 | $ | (29 | ) | $ | 19 | $ | (227 | ) | $ | 9 | |||||||||||
Commodity Margin2 | $ | 657 | $ | 657 | — | % | $ | 1,237 | $ | 1,192 | 3.8 | % | |||||||||
Adjusted EBITDA2 | $ | 452 | $ | 457 | (1.1 | )% | $ | 826 | $ | 795 | 3.9 | % | |||||||||
Adjusted Free Cash Flow2 | $ | 158 | $ | 144 | 9.7 | % | $ | 260 | $ | 169 | 53.8 | % | |||||||||
Net Income (Loss), As Adjusted2 | $ | 22 | $ | 33 | $ | (82 | ) | $ | (29 | ) |
Previous Guidance (as of April 29, 2016) | Current Guidance | ||
Adjusted EBITDA2 | $1,800 - 1,950 | $1,800 - 1,900 | |
Adjusted Free Cash Flow2 | $710 - 860 | $710 - 810 |
• | Power and Commercial Operations: |
— | Generated approximately 27 million MWh3 in the second quarter of 2016 |
— | Achieved top quartile4 safety metrics: 0.86 total recordable incident rate through second quarter |
— | Delivered strong second quarter fleetwide starting reliability: 97.4% |
— | Texas fleet set a record for highest second quarter capacity factor of 62% |
— | Northern California peaker fleet set a record for most starts in a second quarter |
— | Received approval from California Public Utilities Commission for our ten-year PPA with Southern California Edison for 50 MW of capacity and renewable energy from our Geysers assets commencing in January 2018 |
— | Geysers wildfire recovery on track for full capacity with insurance proceeds throughout the year |
• | Portfolio and Balance Sheet Management: |
— | Announcing plan to file with ERCOT for retirement of our 400 MW Clear Lake Power Plant no later than summer of 2018, and possibly sooner depending on negotiations with the facility’s bilateral counterparties |
— | Continued construction of our 760 MW York 2 Energy Center in PJM, targeting COD in the third quarter of 2017 |
— | Advanced development of 345 MW contracted expansion of our Mankato Power Plant in Minnesota, targeting COD by June 2019 |
— | Successfully refinanced approximately $1.2 billion of term loans, ensuring no corporate maturities until 2022 |
1 | Reported as Net Income (Loss) attributable to Calpine on our Consolidated Condensed Statements of Operations. |
2 | Non-GAAP financial measure, see “Regulation G Reconciliations” for further details. |
3 | Includes generation from power plants owned but not operated by Calpine and our share of generation from unconsolidated power plants. |
4 | According to EEI Safety Survey (2015). |
+ | a natural gas pipeline transportation billing credit received in the West segment and |
+ | the impact of our portfolio management activities, including a full-quarter of energy and capacity revenue associated with the operation of our 695 MW Granite Ridge Energy Center, which was acquired on February 5, 2016, and two additional months of energy and capacity revenue associated with the operation of our 309 MW Garrison Energy Center, which commenced commercial operations in June 2015, offset by |
– | the net impact of our contracts, including the expiration of a PPA at our Pastoria Energy Center and of the Greenleaf operating lease, partially offset by a new PPA at our Morgan Energy Center and |
– | lower energy margins due to a decrease in generation and lower realized spark spreads, primarily in the West segment resulting from an increase in hydroelectric generation in the region, partially offset by an increase in generation in the Texas segment driven by higher market spark spreads and lower natural gas prices. |
+ | a natural gas pipeline transportation billing credit received in the West segment, |
+ | the impact of our portfolio management activities, including approximately five months of energy and capacity revenue associated with both our 695 MW Granite Ridge Energy Center, which was acquired on February 5, 2016, and our 309 MW Garrison Energy Center, which commenced commercial operations in June 2015, and |
+ | higher regulatory capacity revenue primarily in PJM and ISO-NE at our power plants that were fully operational period-over-period, partially offset by |
– | the net impact of our contracts, including the expiration of a PPA at our Pastoria Energy Center and of the Greenleaf operating lease, partially offset by a new PPA at our Morgan Energy Center and |
– | lower energy margins due to a decrease in generation and lower realized spark spreads, primarily in the West segment resulting from an increase in hydroelectric generation in the region, partially offset by increased contribution from hedging activity, including retail. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||||||||
2016 | 2015 | Variance | 2016 | 2015 | Variance | |||||||||||||||||||
West | $ | 254 | $ | 240 | $ | 14 | $ | 451 | $ | 458 | $ | (7 | ) | |||||||||||
Texas | 160 | 170 | (10 | ) | 313 | 319 | (6 | ) | ||||||||||||||||
East | 243 | 247 | (4 | ) | 473 | 415 | 58 | |||||||||||||||||
Total | $ | 657 | $ | 657 | $ | — | $ | 1,237 | $ | 1,192 | $ | 45 |
+ | a natural gas pipeline transportation billing credit, partially offset by |
– | lower energy margins due to a decrease in generation and lower realized spark spreads resulting from an increase in hydroelectric generation, |
– | the expiration of a PPA associated with our Pastoria Energy Center in December 2015 and |
– | the expiration of the operating lease related to the Greenleaf power plants in June 2015. |
– | lower energy margins due to a decrease in generation and lower realized spark spreads resulting from an increase in hydroelectric generation, |
– | the expiration of a PPA associated with our Pastoria Energy Center in December 2015 and |
– | the expiration of the operating lease related to the Greenleaf power plants in June 2015, partially offset by |
+ | a natural gas pipeline transportation billing credit. |
– | lower contribution from wholesale hedges, partially offset by |
+ | higher contribution from our retail hedging activity and |
+ | an increase in generation driven by higher spark spreads and lower natural gas prices. |
– | lower contribution from wholesale hedges, partially offset by |
+ | higher contribution from our retail hedging activity. |
– | lower market spark spreads resulting from cooler weather in April 2016 and local natural gas price differentials, partially offset by |
+ | a full quarter of operation of our 695 MW Granite Ridge Energy Center, which was acquired on February 5, 2016, and two additional months of operation of our 309 MW Garrison Energy Center, which commenced commercial operations in June 2015, |
+ | higher contribution from our retail hedging activity and |
+ | the positive impact of a new PPA associated with our Morgan Energy Center, which became effective in February 2016. |
+ | higher contribution from hedging including retail, |
+ | five months of operation of both our 695 MW Granite Ridge Energy Center, which was acquired on February 5, 2016, and our 309 MW Garrison Energy Center, which commenced commercial operations in June 2015, |
+ | the positive impact of a new PPA associated with our Morgan Energy Center, which became effective in February 2016 and |
+ | higher regulatory capacity revenue in PJM and ISO-NE, partially offset by |
– | a decrease in generation at our power plants that were fully operational period-over-period due to lower market spark spreads primarily driven by milder weather in the first quarter of 2016. |
June 30, 2016 | December 31, 2015 | ||||||
Cash and cash equivalents, corporate(1) | $ | 138 | $ | 850 | |||
Cash and cash equivalents, non-corporate | 77 | 56 | |||||
Total cash and cash equivalents(2) | 215 | 906 | |||||
Restricted cash | 168 | 228 | |||||
Corporate Revolving Facility availability(3) | 1,374 | 1,184 | |||||
CDHI letter of credit facility availability | 39 | 59 | |||||
Total current liquidity availability(4) | $ | 1,796 | $ | 2,377 |
(1) | Includes $9 million and $35 million of margin deposits posted with us by our counterparties at June 30, 2016, and December 31, 2015, respectively. |
(2) | Cash and cash equivalents decreased during the six months ended June 30, 2016, primarily resulting from the acquisition of Granite Ridge Energy Center, payments to fund growth projects and other seasonal variations in working capital, which cause fluctuations in our cash and cash equivalents. |
(3) | On February 8, 2016, we amended our Corporate Revolving Facility, extending the maturity by two years to June 27, 2020, and increasing the capacity by an additional $178 million to $1,678 million through June 27, 2018, reverting back to $1,520 million through the maturity date. Further, we increased the letter of credit sublimit by $250 million to $1.0 billion and extended the maturity by two years to June 27, 2020. Our ability to use availability under our Corporate Revolving Facility is unrestricted. |
(4) | Our ability to use corporate cash and cash equivalents is unrestricted. Our $300 million CDHI letter of credit facility is restricted to support certain obligations under PPAs, power transmission and natural gas transportation agreements. |
Six Months Ended June 30, | |||||||
2016 | 2015 | ||||||
Beginning cash and cash equivalents | $ | 906 | $ | 717 | |||
Net cash provided by (used in): | |||||||
Operating activities | 120 | 19 | |||||
Investing activities | (676 | ) | (246 | ) | |||
Financing activities | (135 | ) | (68 | ) | |||
Net decrease in cash and cash equivalents | (691 | ) | (295 | ) | |||
Ending cash and cash equivalents | $ | 215 | $ | 422 |
• | Safety Performance: |
— | Maintained top quartile4 safety metrics: 0.86 total recordable incident rate year to date |
• | Availability Performance: |
— | Northern California peaker fleet set a record for most starts (232) in a second quarter |
— | Delivered strong fleetwide starting reliability: 97.4% |
• | Power Generation: |
— | Texas fleet set a second quarter generation record of 12.6 million MWh3 |
— | Three Texas merchant plants achieved greater than 75% net capacity factor: Pasadena, Freestone and Bosque |
• | Customer Relationships: |
— | Our ten-year PPA with Southern California Edison for 50 MW of capacity and renewable energy from our Geysers assets commencing in January 2018 was approved by the CPUC in the second quarter of 2016. |
Full Year 2016 | |||
Adjusted EBITDA | $ | 1,800 - 1,900 | |
Less: | |||
Operating lease payments | 25 | ||
Major maintenance expense and maintenance capital expenditures(1) | 410 | ||
Cash interest, net(2) | 635 | ||
Cash taxes | 15 | ||
Other | 5 | ||
Adjusted Free Cash Flow | $ | 710 - 810 | |
Debt amortization and repayment (3) | $ | (435 | ) |
Growth capital expenditures | $ | (285 | ) |
(1) | Includes projected 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 fees from consolidated and unconsolidated investments, net of capitalized interest and interest income. |
(3) | Includes $210 million of recurring amortization, as well as $225 million of proceeds from our 2023 First Lien Term Loan that we intend to use to repay project and corporate debt. |
• | 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 Senior Unsecured Notes, First Lien Notes, First Lien Term Loans, Corporate Revolving Facility, 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 from renewable sources of power, interference by states in competitive power markets through subsidies or similar support for new or existing power plants, and other 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 revenue 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 or fuel oil and the 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 Annual Report on Form 10-K for the year ended December 31, 2015, in our Quarterly Report on Form 10-Q for the three months ended June 30, 2016, and in other reports filed by us with the SEC. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(in millions, except share and per share amounts) | ||||||||||||||||
Operating revenues: | ||||||||||||||||
Commodity revenue | $ | 1,551 | $ | 1,407 | $ | 3,136 | $ | 3,045 | ||||||||
Mark-to-market gain (loss) | (391 | ) | 31 | (366 | ) | 34 | ||||||||||
Other revenue | 4 | 4 | 9 | 9 | ||||||||||||
Operating revenues | 1,164 | 1,442 | 2,779 | 3,088 | ||||||||||||
Operating expenses: | ||||||||||||||||
Fuel and purchased energy expense: | ||||||||||||||||
Commodity expense | 897 | 734 | 1,903 | 1,811 | ||||||||||||
Mark-to-market (gain) loss | (355 | ) | 32 | (235 | ) | (35 | ) | |||||||||
Fuel and purchased energy expense | 542 | 766 | 1,668 | 1,776 | ||||||||||||
Plant operating expense | 271 | 272 | 526 | 532 | ||||||||||||
Depreciation and amortization expense | 162 | 160 | 342 | 318 | ||||||||||||
Sales, general and other administrative expense | 35 | 30 | 73 | 67 | ||||||||||||
Other operating expenses | 17 | 20 | 37 | 40 | ||||||||||||
Total operating expenses | 1,027 | 1,248 | 2,646 | 2,733 | ||||||||||||
(Income) from unconsolidated investments in power plants | (3 | ) | (7 | ) | (10 | ) | (12 | ) | ||||||||
Income from operations | 140 | 201 | 143 | 367 | ||||||||||||
Interest expense | 157 | 158 | 314 | 312 | ||||||||||||
Interest (income) | (1 | ) | (1 | ) | (2 | ) | (2 | ) | ||||||||
Debt modification and extinguishment costs | 15 | 13 | 15 | 32 | ||||||||||||
Other (income) expense, net | 7 | 5 | 13 | 7 | ||||||||||||
Income (loss) before income taxes | (38 | ) | 26 | (197 | ) | 18 | ||||||||||
Income tax expense (benefit) | (14 | ) | 5 | 21 | 4 | |||||||||||
Net income (loss) | (24 | ) | 21 | (218 | ) | 14 | ||||||||||
Net income attributable to the noncontrolling interest | (5 | ) | (2 | ) | (9 | ) | (5 | ) | ||||||||
Net income (loss) attributable to Calpine | $ | (29 | ) | $ | 19 | $ | (227 | ) | $ | 9 | ||||||
Basic earnings (loss) per common share attributable to Calpine: | ||||||||||||||||
Weighted average shares of common stock outstanding (in thousands) | 354,066 | 366,975 | 353,784 | 369,938 | ||||||||||||
Net income (loss) per common share attributable to Calpine — basic | $ | (0.08 | ) | $ | 0.05 | $ | (0.64 | ) | $ | 0.02 | ||||||
Diluted earnings (loss) per common share attributable to Calpine: | ||||||||||||||||
Weighted average shares of common stock outstanding (in thousands) | 354,066 | 369,946 | 353,784 | 373,404 | ||||||||||||
Net income (loss) per common share attributable to Calpine — diluted | $ | (0.08 | ) | $ | 0.05 | $ | (0.64 | ) | $ | 0.02 |
June 30, | December 31, | |||||||
2016 | 2015 | |||||||
(in millions, except share and per share amounts) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 215 | $ | 906 | ||||
Accounts receivable, net of allowance of $4 and $2 | 720 | 644 | ||||||
Inventories | 522 | 475 | ||||||
Margin deposits and other prepaid expense | 193 | 137 | ||||||
Restricted cash, current | 148 | 216 | ||||||
Derivative assets, current | 1,231 | 1,698 | ||||||
Current assets held for sale | 206 | — | ||||||
Other current assets | 53 | 19 | ||||||
Total current assets | 3,288 | 4,095 | ||||||
Property, plant and equipment, net | 13,341 | 13,012 | ||||||
Restricted cash, net of current portion | 20 | 12 | ||||||
Investments in power plants | 74 | 79 | ||||||
Long-term derivative assets | 369 | 313 | ||||||
Long-term assets held for sale | — | 130 | ||||||
Other assets | 887 | 1,040 | ||||||
Total assets | $ | 17,979 | $ | 18,681 | ||||
LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 531 | $ | 552 | ||||
Accrued interest payable | 130 | 129 | ||||||
Debt, current portion | 197 | 221 | ||||||
Derivative liabilities, current | 1,360 | 1,734 | ||||||
Other current liabilities | 355 | 412 | ||||||
Total current liabilities | 2,573 | 3,048 | ||||||
Debt, net of current portion | 11,644 | 11,716 | ||||||
Long-term derivative liabilities | 512 | 473 | ||||||
Other long-term liabilities | 298 | 277 | ||||||
Total liabilities | 15,027 | 15,514 | ||||||
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, 359,662,911 and 356,755,747 shares issued, respectively, and 359,139,948 and 356,662,004 shares outstanding, respectively | — | — | ||||||
Treasury stock, at cost, 522,963 and 93,743 shares, respectively | (7 | ) | (1 | ) | ||||
Additional paid-in capital | 9,611 | 9,594 | ||||||
Accumulated deficit | (6,532 | ) | (6,305 | ) | ||||
Accumulated other comprehensive loss | (183 | ) | (179 | ) | ||||
Total Calpine stockholders’ equity | 2,889 | 3,109 | ||||||
Noncontrolling interest | 63 | 58 | ||||||
Total stockholders’ equity | 2,952 | 3,167 | ||||||
Total liabilities and stockholders’ equity | $ | 17,979 | $ | 18,681 |
Six Months Ended June 30, | ||||||||
2016 | 2015 | |||||||
(in millions) | ||||||||
Cash flows from operating activities: | ||||||||
Net income (loss) | $ | (218 | ) | $ | 14 | |||
Adjustments to reconcile net income (loss) to net cash provided by operating activities: | ||||||||
Depreciation and amortization(1) | 459 | 342 | ||||||
Debt extinguishment costs | 15 | — | ||||||
Income taxes | 11 | 3 | ||||||
Mark-to-market activity, net | 130 | (70 | ) | |||||
(Income) from unconsolidated investments in power plants | (10 | ) | (12 | ) | ||||
Return on unconsolidated investments in power plants | 18 | 13 | ||||||
Stock-based compensation expense | 17 | 12 | ||||||
Other | (1 | ) | 2 | |||||
Change in operating assets and liabilities, net of effect of acquisition: | ||||||||
Accounts receivable | (78 | ) | 29 | |||||
Derivative instruments, net | (69 | ) | (36 | ) | ||||
Other assets | (116 | ) | (118 | ) | ||||
Accounts payable and accrued expenses | (90 | ) | (205 | ) | ||||
Other liabilities | 52 | 45 | ||||||
Net cash provided by operating activities | 120 | 19 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property, plant and equipment | (223 | ) | (279 | ) | ||||
Purchase of Granite Ridge Energy Center | (526 | ) | — | |||||
Decrease in restricted cash | 60 | 34 | ||||||
Other | 13 | (1 | ) | |||||
Net cash used in investing activities | $ | (676 | ) | $ | (246 | ) |
Six Months Ended June 30, | ||||||||
2016 | 2015 | |||||||
(in millions) | ||||||||
Cash flows from financing activities: | ||||||||
Borrowings under First Lien Term Loans | $ | 556 | $ | 1,592 | ||||
Repayment of CCFC Term Loans and First Lien Term Loans | (1,209 | ) | (1,613 | ) | ||||
Borrowings under Senior Unsecured Notes | — | 650 | ||||||
Borrowings under First Lien Notes | 625 | — | ||||||
Repurchase of First Lien Notes | — | (147 | ) | |||||
Repayments of project financing, notes payable and other | (81 | ) | (85 | ) | ||||
Financing costs | (26 | ) | (17 | ) | ||||
Stock repurchases | — | (454 | ) | |||||
Other | — | 6 | ||||||
Net cash used in financing activities | (135 | ) | (68 | ) | ||||
Net decrease in cash and cash equivalents | (691 | ) | (295 | ) | ||||
Cash and cash equivalents, beginning of period | 906 | 717 | ||||||
Cash and cash equivalents, end of period | $ | 215 | $ | 422 | ||||
Cash paid during the period for: | ||||||||
Interest, net of amounts capitalized | $ | 289 | $ | 322 | ||||
Income taxes | $ | 8 | $ | 17 | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Change in capital expenditures included in accounts payable | $ | 24 | $ | (20 | ) | |||
Additions to property, plant and equipment through capital lease | $ | — | $ | 9 |
(1) | Includes amortization recorded in Commodity revenue and Commodity expense associated with intangible assets and amortization recorded in interest expense associated with debt issuance costs and discounts. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net income (loss) attributable to Calpine | $ | (29 | ) | $ | 19 | $ | (227 | ) | $ | 9 | ||||||
Debt modification and extinguishment costs(1) | 15 | 13 | 15 | 32 | ||||||||||||
Mark-to-market (gain) loss on derivatives(1)(2) | 36 | 1 | 130 | (70 | ) | |||||||||||
Net Income (Loss), As Adjusted | $ | 22 | $ | 33 | $ | (82 | ) | $ | (29 | ) |
(1) | Assumes 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 include hedge ineffectiveness and adjustments to reflect changes in credit default risk exposure. |
Three Months Ended June 30, 2016 | ||||||||||||||||||||
Consolidation | ||||||||||||||||||||
And | ||||||||||||||||||||
West | Texas | East | Elimination | Total | ||||||||||||||||
Commodity Margin | $ | 254 | $ | 160 | $ | 243 | $ | — | $ | 657 | ||||||||||
Add: Mark-to-market commodity activity, net and other(1) | (62 | ) | 7 | 28 | (8 | ) | (35 | ) | ||||||||||||
Less: | ||||||||||||||||||||
Plant operating expense | 98 | 85 | 96 | (8 | ) | 271 | ||||||||||||||
Depreciation and amortization expense | 56 | 53 | 53 | — | 162 | |||||||||||||||
Sales, general and other administrative expense | 8 | 14 | 12 | 1 | 35 | |||||||||||||||
Other operating expenses | 7 | 2 | 10 | (2 | ) | 17 | ||||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (3 | ) | — | (3 | ) | |||||||||||||
Income from operations | $ | 23 | $ | 13 | $ | 103 | $ | 1 | $ | 140 |
Three Months Ended June 30, 2015 | ||||||||||||||||||||
Consolidation | ||||||||||||||||||||
And | ||||||||||||||||||||
West | Texas | East | Elimination | Total | ||||||||||||||||
Commodity Margin | $ | 240 | $ | 170 | $ | 247 | $ | — | $ | 657 | ||||||||||
Add: Mark-to-market commodity activity, net and other(1) | (14 | ) | 10 | 30 | (7 | ) | 19 | |||||||||||||
Less: | ||||||||||||||||||||
Plant operating expense | 120 | 82 | 77 | (7 | ) | 272 | ||||||||||||||
Depreciation and amortization expense | 65 | 50 | 45 | — | 160 | |||||||||||||||
Sales, general and other administrative expense | 6 | 15 | 9 | — | 30 | |||||||||||||||
Other operating expenses | 10 | 2 | 8 | — | 20 | |||||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (7 | ) | — | (7 | ) | |||||||||||||
Income from operations | $ | 25 | $ | 31 | $ | 145 | $ | — | $ | 201 |
Six Months Ended June 30, 2016 | ||||||||||||||||||||
Consolidation | ||||||||||||||||||||
And | ||||||||||||||||||||
West | Texas | East | Elimination | Total | ||||||||||||||||
Commodity Margin | $ | 451 | $ | 313 | $ | 473 | $ | — | $ | 1,237 | ||||||||||
Add: Mark-to-market commodity activity, net and other(2) | (16 | ) | (103 | ) | 7 | (14 | ) | (126 | ) | |||||||||||
Less: | ||||||||||||||||||||
Plant operating expense | 189 | 171 | 180 | (14 | ) | 526 | ||||||||||||||
Depreciation and amortization expense | 125 | 106 | 111 | — | 342 | |||||||||||||||
Sales, general and other administrative expense | 18 | 30 | 24 | 1 | 73 | |||||||||||||||
Other operating expenses | 15 | 4 | 20 | (2 | ) | 37 | ||||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (10 | ) | — | (10 | ) | |||||||||||||
Income (loss) from operations | $ | 88 | $ | (101 | ) | $ | 155 | $ | 1 | $ | 143 |
Six Months Ended June 30, 2015 | ||||||||||||||||||||
Consolidation | ||||||||||||||||||||
And | ||||||||||||||||||||
West | Texas | East | Elimination | Total | ||||||||||||||||
Commodity Margin | $ | 458 | $ | 319 | $ | 415 | $ | — | $ | 1,192 | ||||||||||
Add: Mark-to-market commodity activity, net and other(2) | 105 | 51 | (22 | ) | (14 | ) | 120 | |||||||||||||
Less: | ||||||||||||||||||||
Plant operating expense | 226 | 171 | 149 | (14 | ) | 532 | ||||||||||||||
Depreciation and amortization expense | 132 | 99 | 87 | — | 318 | |||||||||||||||
Sales, general and other administrative expense | 16 | 32 | 19 | — | 67 | |||||||||||||||
Other operating expenses | 20 | 4 | 16 | — | 40 | |||||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (12 | ) | — | (12 | ) | |||||||||||||
Income from operations | $ | 169 | $ | 64 | $ | 134 | $ | — | $ | 367 |
(1) | Includes $(20) million and $(18) million of lease levelization and $27 million and $3 million of amortization expense for the three months ended June 30, 2016 and 2015, respectively. |
(2) | Includes $(42) million and $(42) million of lease levelization and $54 million and $7 million of amortization expense for the six months ended June 30, 2016 and 2015, respectively. |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net income (loss) attributable to Calpine | $ | (29 | ) | $ | 19 | $ | (227 | ) | $ | 9 | ||||||
Net income attributable to the noncontrolling interest | 5 | 2 | 9 | 5 | ||||||||||||
Income tax expense (benefit) | (14 | ) | 5 | 21 | 4 | |||||||||||
Debt modification and extinguishment costs and other (income) expense, net | 22 | 18 | 28 | 39 | ||||||||||||
Interest expense, net of interest income | 156 | 157 | 312 | 310 | ||||||||||||
Income from operations | $ | 140 | $ | 201 | $ | 143 | $ | 367 | ||||||||
Add: | ||||||||||||||||
Adjustments to reconcile income from operations to Adjusted EBITDA: | ||||||||||||||||
Depreciation and amortization expense, excluding deferred financing costs(1) | 160 | 159 | 339 | 316 | ||||||||||||
Major maintenance expense | 79 | 90 | 143 | 168 | ||||||||||||
Operating lease expense | 7 | 8 | 13 | 17 | ||||||||||||
Mark-to-market (gain) loss on commodity derivative activity | 36 | 1 | 131 | (69 | ) | |||||||||||
Adjustments to reflect Adjusted EBITDA from unconsolidated investments and exclude the noncontrolling interest(2) | 7 | 4 | 12 | 9 | ||||||||||||
Stock-based compensation expense | 8 | 1 | 17 | 12 | ||||||||||||
Loss on dispositions of assets | 3 | 2 | 5 | 3 | ||||||||||||
Contract amortization | 27 | 3 | 54 | 7 | ||||||||||||
Other | (15 | ) | (12 | ) | (31 | ) | (35 | ) | ||||||||
Total Adjusted EBITDA | $ | 452 | $ | 457 | $ | 826 | $ | 795 | ||||||||
Less: | ||||||||||||||||
Operating lease payments | 7 | 8 | 13 | 17 | ||||||||||||
Major maintenance expense and capital expenditures(3) | 122 | 136 | 227 | 279 | ||||||||||||
Cash interest, net(4) | 159 | 157 | 317 | 312 | ||||||||||||
Cash taxes | 6 | 11 | 8 | 17 | ||||||||||||
Other | — | 1 | 1 | 1 | ||||||||||||
Adjusted Free Cash Flow(5) | $ | 158 | $ | 144 | $ | 260 | $ | 169 |
(1) | Excludes depreciation and amortization expense attributable to the non-controlling interest. |
(2) | 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, 2016 and 2015. |
(3) | Includes $81 million and $146 million in major maintenance expense for the three and six months ended June 30, 2016, respectively, and $41 million and $81 million in maintenance capital expenditures for the three and six months ended June 30, 2016, respectively. Includes $90 million and $169 million in major maintenance expense for the three and six months ended June 30, 2015, respectively, and $46 million and $110 million in maintenance capital expenditures for the three and six months ended June 30, 2015, 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 increases in working capital of $69 million and $127 million for the three and six months ended June 30, 2016, respectively, and increases in working capital of $165 million and $251 million for the three and six months ended June 30, 2015, 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, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Commodity Margin | $ | 657 | $ | 657 | $ | 1,237 | $ | 1,192 | ||||||||
Other revenue | 4 | 5 | 9 | 9 | ||||||||||||
Plant operating expense(1) | (180 | ) | (177 | ) | (361 | ) | (350 | ) | ||||||||
Sales, general and administrative expense(2) | (31 | ) | (32 | ) | (64 | ) | (62 | ) | ||||||||
Other operating expenses(3) | (12 | ) | (11 | ) | (25 | ) | (21 | ) | ||||||||
Adjusted EBITDA from unconsolidated investments in power plants | 15 | 14 | 31 | 28 | ||||||||||||
Other | (1 | ) | 1 | (1 | ) | (1 | ) | |||||||||
Adjusted EBITDA | $ | 452 | $ | 457 | $ | 826 | $ | 795 |
(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 2016 Range: | Low | High | ||||
GAAP Net Income (1) | $ | 70 | $ | 170 | ||
Plus: | ||||||
Debt extinguishment costs | 15 | 15 | ||||
Interest expense, net of interest income | 640 | 640 | ||||
Depreciation and amortization expense | 655 | 655 | ||||
Major maintenance expense | 265 | 265 | ||||
Operating lease expense | 25 | 25 | ||||
Other(2) | 130 | 130 | ||||
Adjusted EBITDA | $ | 1,800 | $ | 1,900 | ||
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 | $ | 810 |
(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 June 30, | Six Months Ended June 30, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Total MWh generated (in thousands)(1)(2) | 26,355 | 26,954 | 50,480 | 52,521 | ||||||||
West | 5,035 | 8,430 | 11,453 | 15,683 | ||||||||
Texas | 12,387 | 11,194 | 23,636 | 22,738 | ||||||||
East | 8,933 | 7,330 | 15,391 | 14,100 | ||||||||
Average availability(2) | 85.6 | % | 86.0 | % | 87.8 | % | 87.7 | % | ||||
West | 85.6 | % | 82.8 | % | 88.0 | % | 85.6 | % | ||||
Texas | 88.9 | % | 87.7 | % | 87.8 | % | 87.9 | % | ||||
East | 82.4 | % | 87.0 | % | 87.7 | % | 89.3 | % | ||||
Average capacity factor, excluding peakers | 50.2 | % | 53.4 | % | 48.8 | % | 52.7 | % | ||||
West | 33.1 | % | 54.7 | % | 38.0 | % | 51.2 | % | ||||
Texas | 61.7 | % | 55.8 | % | 58.9 | % | 57.0 | % | ||||
East | 51.7 | % | 48.7 | % | 46.3 | % | 48.3 | % | ||||
Steam adjusted heat rate (Btu/kWh)(2) | 7,313 | 7,329 | 7,289 | 7,296 | ||||||||
West | 7,316 | 7,325 | 7,324 | 7,314 | ||||||||
Texas | 7,138 | 7,078 | 7,095 | 7,087 | ||||||||
East | 7,570 | 7,738 | 7,581 | 7,629 |
(1) | Excludes generation from unconsolidated power plants and power plants owned but not operated by us. |
(2) | Generation, average availability and steam adjusted heat rate exclude power plants and units that are inactive. |
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