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 28, 2016.* |
* | Furnished herewith. |
By: | /s/ ZAMIR RAUF | |||
Zamir Rauf | ||||
Executive Vice President and | ||||
Chief Financial Officer | ||||
October 28, 2016 |
Exhibit No. | Description | |
99.1 | Calpine Corporation Press Release dated October 28, 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 September 30, | Nine Months Ended September 30, | ||||||||||||||||||||
2016 | 2015 | % Change | 2016 | 2015 | % Change | ||||||||||||||||
Operating Revenues | $ | 2,355 | $ | 1,948 | 20.9 | % | $ | 5,134 | $ | 5,036 | 1.9 | % | |||||||||
Income from operations | $ | 462 | $ | 466 | (0.9 | )% | $ | 605 | $ | 833 | (27.4 | )% | |||||||||
Net Income1 | $ | 295 | $ | 273 | 8.1 | % | $ | 68 | $ | 282 | (75.9 | )% | |||||||||
Commodity Margin2 | $ | 820 | $ | 974 | (15.8 | )% | $ | 2,057 | $ | 2,166 | (5.0 | )% | |||||||||
Adjusted EBITDA2 | $ | 632 | $ | 791 | (20.1 | )% | $ | 1,458 | $ | 1,586 | (8.1 | )% | |||||||||
Adjusted Free Cash Flow2 | $ | 383 | $ | 576 | (33.5 | )% | $ | 643 | $ | 745 | (13.7 | )% | |||||||||
Net Income, As Adjusted2 | $ | 186 | $ | 347 | (46.4 | )% | $ | 104 | $ | 318 | (67.3 | )% | |||||||||
Weighted Average Shares Outstanding (diluted) | 356 | 358 | 356 | 368 |
2016 | 2017 | ||
Adjusted EBITDA2 | $1,800 - 1,850 | $1,800 - 1,950 | |
Adjusted Free Cash Flow2 | $710 - 760 | $710 - 860 |
• | Power and Commercial Operations: |
— | Generated record 34 million MWh3 in the third quarter of 2016 |
— | Achieved top quartile4 safety metrics: 0.56 total recordable incident rate through third quarter |
— | Delivered strong third quarter fleetwide starting reliability: 98.3% |
— | Champion Energy ranked highest in customer satisfaction among Texas retail electric providers by J.D. Power for sixth time in past seven years |
— | Entered into a new five-year steam agreement, subject to certain conditions precedent, with a wholly owned subsidiary of The Dow Chemical Company to provide steam from our Texas City Power Plant through 2021 |
— | Entered into a new five-year PPA with USS-POSCO Industries to provide 50 MW of energy and steam from our Los Medanos Energy Center commencing in January 2017, which also provides for yearly extensions through 2024 |
— | Completed repairs on our Geysers assets to generate renewable power for our customers at pre-fire capacity levels |
• | Portfolio and Balance Sheet Management: |
— | Announced accretive acquisition of leading commercial and industrial retail electricity provider Noble Americas Energy Solutions, LLC for $800 million plus approximately $100 million of estimated net working capital at closing |
— | Announced and closed on the sale of our Mankato Power Plant to Southern Power Company for $396 million5 |
— | Received approval from ERCOT to economically retire our 400 MW Clear Lake Power Plant by February 2017 |
1 | Reported as Net Income 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). |
5 | Excluding working capital and other adjustments. |
– | lower energy margins due to decreased contribution from wholesale hedges across our segments and lower realized spark spreads in our Texas segment, |
– | the net impact of our contracts, including the expiration of a PPA at our Pastoria Energy Center, partially offset by a new PPA at our Morgan Energy Center and |
– | lower regulatory capacity revenue, primarily in the West and PJM, partially offset by |
+ | increased contribution from our retail hedging activity 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. |
– | lower energy margins due to decreased contribution from wholesale hedges across our segments and lower realized spark spreads in our Texas segment, |
– | 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 regulatory capacity revenue, primarily in the West, partially offset by |
+ | a natural gas pipeline transportation billing credit received in the West segment in the second quarter, |
+ | increased contribution from our retail hedging activity and |
+ | the impact of our portfolio management activities, primarily including approximately eight months of energy and capacity revenue associated with our 695 MW Granite Ridge Energy Center, which was acquired on February 5, 2016, and approximately five months associated with our 309 MW Garrison Energy Center, which commenced commercial operations in June 2015. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||||||
2016 | 2015 | Variance | 2016 | 2015 | Variance | |||||||||||||||||||
West | $ | 298 | $ | 385 | $ | (87 | ) | $ | 749 | $ | 843 | $ | (94 | ) | ||||||||||
Texas | 198 | 264 | (66 | ) | 511 | 583 | (72 | ) | ||||||||||||||||
East | 324 | 325 | (1 | ) | 797 | 740 | 57 | |||||||||||||||||
Total | $ | 820 | $ | 974 | $ | (154 | ) | $ | 2,057 | $ | 2,166 | $ | (109 | ) |
– | lower contribution from hedging activity and |
– | lower contribution from hedges, |
– | the expiration of a PPA and a Resource Adequacy contract at 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 |
+ | the receipt of a natural gas pipeline transportation billing credit during the second quarter of 2016. |
– | lower realized spark spreads resulting from a decrease in hedge value and lower market liquidations, partially offset by |
+ | positive contribution from our retail hedging activity. |
– | lower realized spark spreads resulting from a decrease in hedge value and lower market liquidations, partially offset by |
+ | positive contribution from our retail hedging activity. |
+ | a full quarter of operation at our 695 MW Granite Ridge Energy Center, which was acquired in February 2016, |
+ | the positive impact of a new PPA associated with our Morgan Energy Center, which became effective in February 2016 and |
+ | positive contribution from our retail hedging activity, largely offset by |
– | lower contribution from hedges and |
– | lower regulatory capacity revenue in PJM. |
+ | approximately eight months of operation at our 695 MW Granite Ridge Energy Center, which was acquired in February 2016, and approximately five months of operation at our 309 MW Garrison Energy Center, which commenced operations in June 2015, |
+ | the positive impact of a new PPA associated with our Morgan Energy Center, which became effective in February 2016, and |
+ | positive contribution from our retail hedging activity, partially offset by |
– | lower contribution from hedges. |
September 30, 2016 | December 31, 2015 | ||||||
Cash and cash equivalents, corporate(1) | $ | 440 | $ | 850 | |||
Cash and cash equivalents, non-corporate | 121 | 56 | |||||
Total cash and cash equivalents | 561 | 906 | |||||
Restricted cash | 225 | 228 | |||||
Corporate Revolving Facility availability(2) | 1,410 | 1,184 | |||||
CDHI letter of credit facility availability | 39 | 59 | |||||
Total current liquidity availability(3) | $ | 2,235 | $ | 2,377 |
(1) | Includes $30 million and $35 million of margin deposits posted with us by our counterparties at September 30, 2016, and December 31, 2015, respectively. |
(2) | 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. |
(3) | 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. |
Nine Months Ended September 30, | |||||||
2016 | 2015 | ||||||
Beginning cash and cash equivalents | $ | 906 | $ | 717 | |||
Net cash provided by (used in): | |||||||
Operating activities | 667 | 559 | |||||
Investing activities | (841 | ) | (450 | ) | |||
Financing activities | (171 | ) | (167 | ) | |||
Net decrease in cash and cash equivalents | (345 | ) | (58 | ) | |||
Ending cash and cash equivalents | $ | 561 | $ | 659 |
• | Safety Performance: |
— | Maintained top quartile4 safety metrics: 0.56 total recordable incident rate year to date |
• | Availability Performance: |
— | Achieved low fleetwide forced outage factor: 1.2% |
— | Delivered strong fleetwide starting reliability: 98.3% |
• | Power Generation: |
— | Nine gas-fired plants with third quarter capacity factors greater than 80%: |
◦ | West: Hermiston, Pastoria |
◦ | Texas: Bosque, Freestone, Hidalgo, Pasadena |
◦ | East: Fore River, Kennedy, Morgan |
• | Customer Relationships: |
— | We entered into a new five-year steam agreement, subject to certain conditions precedent, with a wholly owned subsidiary of The Dow Chemical Company to provide steam from our Texas City Power Plant through 2021. |
— | We entered into a new five-year PPA with USS-POSCO Industries to provide 50 MW of energy and steam from our Los Medanos Energy Center commencing in January 2017, which also provides for yearly extensions through 2024. |
— | Champion was ranked highest in customer satisfaction among Texas retail electric providers according to the J.D. Power 2016 Electric Provider Retail Customer Satisfaction Study. This is the sixth time Champion Energy has received the top ranking in the past seven years. |
(in millions) | Full Year 2016 | Full Year 2017 | |||
Adjusted EBITDA | $ | 1,800 - 1,850 | 1,800 - 1,950 | ||
Less: | |||||
Operating lease payments | 25 | 25 | |||
Major maintenance expense and maintenance capital expenditures(1) | 410 | 420 | |||
Cash interest, net(2) | 635 | 635 | |||
Cash taxes | 15 | 10 | |||
Other | 5 | — | |||
Adjusted Free Cash Flow | $ | 710 - 760 | 710 - 860 | ||
Debt amortization and repayment (3) | $ | (380 | ) | (200 | ) |
Growth capital expenditures | $ | (285 | ) | (250 | ) |
(1) | Includes projected major maintenance expense of $270 million and maintenance capital expenditures of $140 million in 2016 and major maintenance expense of $315 million and maintenance capital expenditures of $105 million in 2017. 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) | 2016 amount includes $210 million of recurring amortization, as well as $120 million of callable 7 7/8% 2023 Senior Secured Notes and buyout of Pasadena lessor interest. 2017 amount includes $200 million of recurring amortization. |
• | 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 September 30, 2016, and in other reports filed by us with the SEC. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
(in millions, except share and per share amounts) | ||||||||||||||||
Operating revenues: | ||||||||||||||||
Commodity revenue | $ | 2,063 | $ | 1,888 | $ | 5,199 | $ | 4,933 | ||||||||
Mark-to-market gain (loss) | 287 | 55 | (79 | ) | 89 | |||||||||||
Other revenue | 5 | 5 | 14 | 14 | ||||||||||||
Operating revenues | 2,355 | 1,948 | 5,134 | 5,036 | ||||||||||||
Operating expenses: | ||||||||||||||||
Fuel and purchased energy expense: | ||||||||||||||||
Commodity expense | 1,294 | 943 | 3,197 | 2,754 | ||||||||||||
Mark-to-market (gain) loss | 178 | 130 | (57 | ) | 95 | |||||||||||
Fuel and purchased energy expense | 1,472 | 1,073 | 3,140 | 2,849 | ||||||||||||
Plant operating expense | 215 | 200 | 741 | 732 | ||||||||||||
Depreciation and amortization expense | 161 | 166 | 503 | 484 | ||||||||||||
Sales, general and other administrative expense | 33 | 33 | 106 | 100 | ||||||||||||
Other operating expenses | 18 | 16 | 55 | 56 | ||||||||||||
Total operating expenses | 1,899 | 1,488 | 4,545 | 4,221 | ||||||||||||
(Income) from unconsolidated investments in power plants | (6 | ) | (6 | ) | (16 | ) | (18 | ) | ||||||||
Income from operations | 462 | 466 | 605 | 833 | ||||||||||||
Interest expense | 158 | 159 | 472 | 471 | ||||||||||||
Interest (income) | (1 | ) | (1 | ) | (3 | ) | (3 | ) | ||||||||
Debt modification and extinguishment costs | — | — | 15 | 32 | ||||||||||||
Other (income) expense, net | 8 | 1 | 21 | 8 | ||||||||||||
Income before income taxes | 297 | 307 | 100 | 325 | ||||||||||||
Income tax expense (benefit) | (4 | ) | 28 | 17 | 32 | |||||||||||
Net income | 301 | 279 | 83 | 293 | ||||||||||||
Net income attributable to the noncontrolling interest | (6 | ) | (6 | ) | (15 | ) | (11 | ) | ||||||||
Net income attributable to Calpine | $ | 295 | $ | 273 | $ | 68 | $ | 282 | ||||||||
Basic earnings per common share attributable to Calpine: | ||||||||||||||||
Weighted average shares of common stock outstanding (in thousands) | 354,215 | 355,443 | 353,929 | 365,053 | ||||||||||||
Net income per common share attributable to Calpine — basic | $ | 0.83 | $ | 0.77 | $ | 0.19 | $ | 0.77 | ||||||||
Diluted earnings per common share attributable to Calpine: | ||||||||||||||||
Weighted average shares of common stock outstanding (in thousands) | 356,352 | 357,676 | 355,980 | 368,219 | ||||||||||||
Net income per common share attributable to Calpine — diluted | $ | 0.83 | $ | 0.76 | $ | 0.19 | $ | 0.77 |
September 30, | December 31, | |||||||
2016 | 2015 | |||||||
(in millions, except share and per share amounts) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 561 | $ | 906 | ||||
Accounts receivable, net of allowance of $5 and $2 | 801 | 644 | ||||||
Inventories | 518 | 475 | ||||||
Margin deposits and other prepaid expense | 178 | 137 | ||||||
Restricted cash, current | 210 | 216 | ||||||
Derivative assets, current | 959 | 1,698 | ||||||
Current assets held for sale | 452 | — | ||||||
Other current assets | 36 | 19 | ||||||
Total current assets | 3,715 | 4,095 | ||||||
Property, plant and equipment, net | 13,069 | 13,012 | ||||||
Restricted cash, net of current portion | 15 | 12 | ||||||
Investments in power plants | 80 | 79 | ||||||
Long-term derivative assets | 323 | 313 | ||||||
Long-term assets held for sale | — | 130 | ||||||
Other assets | 786 | 1,040 | ||||||
Total assets | $ | 17,988 | $ | 18,681 | ||||
LIABILITIES & STOCKHOLDERS’ EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 590 | $ | 552 | ||||
Accrued interest payable | 144 | 129 | ||||||
Debt, current portion | 197 | 221 | ||||||
Derivative liabilities, current | 991 | 1,734 | ||||||
Other current liabilities | 392 | 412 | ||||||
Total current liabilities | 2,314 | 3,048 | ||||||
Debt, net of current portion | 11,623 | 11,716 | ||||||
Long-term derivative liabilities | 436 | 473 | ||||||
Other long-term liabilities | 344 | 277 | ||||||
Total liabilities | 14,717 | 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, 359,609,997 and 356,755,747 shares issued, respectively, and 359,080,056 and 356,662,004 shares outstanding, respectively | — | — | ||||||
Treasury stock, at cost, 529,941 and 93,743 shares, respectively | (7 | ) | (1 | ) | ||||
Additional paid-in capital | 9,618 | 9,594 | ||||||
Accumulated deficit | (6,237 | ) | (6,305 | ) | ||||
Accumulated other comprehensive loss | (170 | ) | (179 | ) | ||||
Total Calpine stockholders’ equity | 3,204 | 3,109 | ||||||
Noncontrolling interest | 67 | 58 | ||||||
Total stockholders’ equity | 3,271 | 3,167 | ||||||
Total liabilities and stockholders’ equity | $ | 17,988 | $ | 18,681 |
Nine Months Ended September 30, | ||||||||
2016 | 2015 | |||||||
(in millions) | ||||||||
Cash flows from operating activities: | ||||||||
Net income | $ | 83 | $ | 293 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||||
Depreciation and amortization(1) | 672 | 519 | ||||||
Debt extinguishment costs | 15 | 1 | ||||||
Deferred income taxes | 15 | 12 | ||||||
Mark-to-market activity, net | 21 | 4 | ||||||
(Income) from unconsolidated investments in power plants | (16 | ) | (18 | ) | ||||
Return on unconsolidated investments in power plants | 19 | 23 | ||||||
Stock-based compensation expense | 23 | 19 | ||||||
Other | 1 | (1 | ) | |||||
Change in operating assets and liabilities, net of effect of acquisition: | ||||||||
Accounts receivable | (168 | ) | 42 | |||||
Derivative instruments, net | (71 | ) | (44 | ) | ||||
Other assets | (75 | ) | (199 | ) | ||||
Accounts payable and accrued expenses | 46 | (200 | ) | |||||
Other liabilities | 102 | 108 | ||||||
Net cash provided by operating activities | 667 | 559 | ||||||
Cash flows from investing activities: | ||||||||
Purchases of property, plant and equipment | (337 | ) | (411 | ) | ||||
Purchase of Granite Ridge Energy Center | (526 | ) | — | |||||
(Increase) Decrease in restricted cash | 2 | (31 | ) | |||||
Other | 20 | (8 | ) | |||||
Net cash used in investing activities | $ | (841 | ) | $ | (450 | ) |
Nine Months Ended September 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 | (1,220 | ) | (1,622 | ) | ||||
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 | (98 | ) | (102 | ) | ||||
Financing costs | (27 | ) | (17 | ) | ||||
Stock repurchases | — | (510 | ) | |||||
Shares withheld for tax obligations on share-based awards | (5 | ) | (11 | ) | ||||
Other | (2 | ) | — | |||||
Net cash used in financing activities | (171 | ) | (167 | ) | ||||
Net decrease in cash and cash equivalents | (345 | ) | (58 | ) | ||||
Cash and cash equivalents, beginning of period | 906 | 717 | ||||||
Cash and cash equivalents, end of period | $ | 561 | $ | 659 | ||||
Cash paid during the period for: | ||||||||
Interest, net of amounts capitalized | $ | 421 | $ | 465 | ||||
Income taxes | $ | 10 | $ | 19 | ||||
Supplemental disclosure of non-cash investing and financing activities: | ||||||||
Change in capital expenditures included in accounts payable | $ | (4 | ) | $ | (17 | ) | ||
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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net income attributable to Calpine | $ | 295 | $ | 273 | $ | 68 | $ | 282 | ||||||||
Debt modification and extinguishment costs(1) | — | — | 15 | 32 | ||||||||||||
Mark-to-market (gain) loss on derivatives(1)(2) | (109 | ) | 74 | 21 | 4 | |||||||||||
Net Income, As Adjusted | $ | 186 | $ | 347 | $ | 104 | $ | 318 |
(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 September 30, 2016 | ||||||||||||||||||||
Consolidation | ||||||||||||||||||||
And | ||||||||||||||||||||
West | Texas | East | Elimination | Total | ||||||||||||||||
Commodity Margin | $ | 298 | $ | 198 | $ | 324 | $ | — | $ | 820 | ||||||||||
Add: Mark-to-market commodity activity, net and other(1) | 11 | 110 | (51 | ) | (7 | ) | 63 | |||||||||||||
Less: | ||||||||||||||||||||
Plant operating expense | 79 | 65 | 78 | (7 | ) | 215 | ||||||||||||||
Depreciation and amortization expense | 56 | 53 | 52 | — | 161 | |||||||||||||||
Sales, general and other administrative expense | 9 | 13 | 12 | (1 | ) | 33 | ||||||||||||||
Other operating expenses | 8 | 2 | 7 | 1 | 18 | |||||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (6 | ) | — | (6 | ) | |||||||||||||
Income from operations | $ | 157 | $ | 175 | $ | 130 | $ | — | $ | 462 |
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 |
Nine Months Ended September 30, 2016 | ||||||||||||||||||||
Consolidation | ||||||||||||||||||||
And | ||||||||||||||||||||
West | Texas | East | Elimination | Total | ||||||||||||||||
Commodity Margin | $ | 749 | $ | 511 | $ | 797 | $ | — | $ | 2,057 | ||||||||||
Add: Mark-to-market commodity activity, net and other(2) | (5 | ) | 7 | (44 | ) | (21 | ) | (63 | ) | |||||||||||
Less: | ||||||||||||||||||||
Plant operating expense | 268 | 236 | 258 | (21 | ) | 741 | ||||||||||||||
Depreciation and amortization expense | 181 | 159 | 163 | — | 503 | |||||||||||||||
Sales, general and other administrative expense | 27 | 43 | 36 | — | 106 | |||||||||||||||
Other operating expenses | 23 | 6 | 27 | (1 | ) | 55 | ||||||||||||||
(Income) from unconsolidated investments in power plants | — | — | (16 | ) | — | (16 | ) | |||||||||||||
Income from operations | $ | 245 | $ | 74 | $ | 285 | $ | 1 | $ | 605 |
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(2) | 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 |
(1) | Includes $40 million and $41 million of lease levelization and $25 million and $4 million of amortization expense for the three months ended September 30, 2016 and 2015, respectively. |
(2) | Includes $(2) million and $(1) million of lease levelization and $79 million and $11 million of amortization expense for the nine months ended September 30, 2016 and 2015, respectively. |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Net income attributable to Calpine | $ | 295 | $ | 273 | $ | 68 | $ | 282 | ||||||||
Net income attributable to the noncontrolling interest | 6 | 6 | 15 | 11 | ||||||||||||
Income tax expense (benefit) | (4 | ) | 28 | 17 | 32 | |||||||||||
Debt modification and extinguishment costs and other (income) expense, net | 8 | 1 | 36 | 40 | ||||||||||||
Interest expense, net of interest income | 157 | 158 | 469 | 468 | ||||||||||||
Income from operations | $ | 462 | $ | 466 | $ | 605 | $ | 833 | ||||||||
Add: | ||||||||||||||||
Adjustments to reconcile income from operations to Adjusted EBITDA: | ||||||||||||||||
Depreciation and amortization expense, excluding deferred financing costs(1) | 160 | 164 | 499 | 480 | ||||||||||||
Major maintenance expense | 43 | 27 | 186 | 195 | ||||||||||||
Operating lease expense | 6 | 6 | 19 | 23 | ||||||||||||
Mark-to-market (gain) loss on commodity derivative activity | (109 | ) | 75 | 22 | 6 | |||||||||||
Adjustments to reflect Adjusted EBITDA from unconsolidated investments and exclude the noncontrolling interest(2) | (4 | ) | (3 | ) | 8 | 6 | ||||||||||
Stock-based compensation expense | 6 | 7 | 23 | 19 | ||||||||||||
Loss on dispositions of assets | 1 | 5 | 6 | 8 | ||||||||||||
Contract amortization | 25 | 4 | 79 | 11 | ||||||||||||
Other | 42 | 40 | 11 | 5 | ||||||||||||
Total Adjusted EBITDA | $ | 632 | $ | 791 | $ | 1,458 | $ | 1,586 | ||||||||
Less: | ||||||||||||||||
Operating lease payments | 6 | 6 | 19 | 23 | ||||||||||||
Major maintenance expense and capital expenditures(3) | 84 | 51 | 311 | 330 | ||||||||||||
Cash interest, net(4) | 160 | 156 | 477 | 468 | ||||||||||||
Cash taxes | (1 | ) | 1 | 7 | 18 | |||||||||||
Other | — | 1 | 1 | 2 | ||||||||||||
Adjusted Free Cash Flow(5) | $ | 383 | $ | 576 | $ | 643 | $ | 745 | ||||||||
Weighted Average Shares Outstanding (diluted) | 356 | 358 | 356 | 368 |
(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 nine months ended September 30, 2016 and 2015. |
(3) | Includes $45 million and $191 million in major maintenance expense for the three and nine months ended September 30, 2016, respectively, and $39 million and $120 million in maintenance capital expenditures for the three and nine months ended September 30, 2016, respectively. 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 expenditures for the three and nine months ended September 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) | 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 September 30, | Nine Months Ended September 30, | |||||||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||||||
Commodity Margin | $ | 820 | $ | 974 | $ | 2,057 | $ | 2,166 | ||||||||
Other revenue | 4 | 4 | 13 | 13 | ||||||||||||
Plant operating expense(1) | (163 | ) | (160 | ) | (524 | ) | (510 | ) | ||||||||
Sales, general and administrative expense(2) | (31 | ) | (31 | ) | (95 | ) | (93 | ) | ||||||||
Other operating expenses(3) | (12 | ) | (12 | ) | (37 | ) | (33 | ) | ||||||||
Adjusted EBITDA from unconsolidated investments in power plants | 14 | 15 | 45 | 43 | ||||||||||||
Other | — | 1 | (1 | ) | — | |||||||||||
Adjusted EBITDA | $ | 632 | $ | 791 | $ | 1,458 | $ | 1,586 |
(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) | $ | 220 | $ | 270 | ||
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 | ||||
Gain on sale of assets, net | (150 | ) | (150 | ) | ||
Other(2) | 130 | 130 | ||||
Adjusted EBITDA | $ | 1,800 | $ | 1,850 | ||
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 | $ | 760 |
(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. |
Full Year 2017 Range: | Low | High | ||||
GAAP Net Income (1) | $ | 105 | $ | 255 | ||
Plus: | ||||||
Interest expense, net of interest income | 640 | 640 | ||||
Depreciation and amortization expense | 640 | 640 | ||||
Major maintenance expense | 310 | 310 | ||||
Operating lease expense | 25 | 25 | ||||
Other(2) | 80 | 80 | ||||
Adjusted EBITDA | $ | 1,800 | $ | 1,950 | ||
Less: | ||||||
Operating lease payments | 25 | 25 | ||||
Major maintenance expense and maintenance capital expenditures(3) | 420 | 420 | ||||
Cash interest, net(4) | 635 | 635 | ||||
Cash taxes | 10 | 10 | ||||
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 $315 million and maintenance capital expenditures of $105 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, | |||||||||||
2016 | 2015 | 2016 | 2015 | |||||||||
Total MWh generated (in thousands)(1)(2) | 33,552 | 32,583 | 84,032 | 85,104 | ||||||||
West | 8,343 | 10,117 | 19,796 | 25,800 | ||||||||
Texas | 13,670 | 13,576 | 37,306 | 36,314 | ||||||||
East | 11,539 | 8,890 | 26,930 | 22,990 | ||||||||
Average availability(2) | 97.3 | % | 97.0 | % | 90.9 | % | 90.8 | % | ||||
West | 98.9 | % | 97.6 | % | 91.6 | % | 89.6 | % | ||||
Texas | 97.0 | % | 97.2 | % | 90.8 | % | 90.9 | % | ||||
East | 96.5 | % | 96.2 | % | 90.7 | % | 91.6 | % | ||||
Average capacity factor, excluding peakers | 62.6 | % | 63.3 | % | 53.4 | % | 56.3 | % | ||||
West | 54.5 | % | 66.0 | % | 43.5 | % | 56.1 | % | ||||
Texas | 67.4 | % | 66.9 | % | 61.7 | % | 60.3 | % | ||||
East | 64.3 | % | 55.8 | % | 52.4 | % | 50.9 | % | ||||
Steam adjusted heat rate (Btu/kWh)(2) | 7,333 | 7,336 | 7,307 | 7,312 | ||||||||
West | 7,213 | 7,333 | 7,276 | 7,322 | ||||||||
Texas | 7,142 | 7,111 | 7,113 | 7,096 | ||||||||
East | 7,660 | 7,710 | 7,614 | 7,660 |
(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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