Atlantic Power reports first quarter results

  On May7,2015 Atlantic Power reported it's first quarter 2015 results.It was a lukewarm report.Atlantic Power is an electric utility with 28 operating power generating projects;some are in Canada and some are in United States.It produces 2945 MW of power and has it's headquarters in Boston.
    Highlights of the quarter
The big item  for this quarter is the sale of 5 wind asset facilities for $350 million which is 13 times it's expected cash distribution.This is considered a good price as developing business will often sell for 5 to 6 times operating income.Some of these facilities (like the Rockland plant) are quite recent acquisitions.The proceeds of the sale will be used to redeem a $311 million 9%  unsecured note.It also repaid $24 million of a term loan and $16 million from discretionary debt.None of the proceeds will be included in EBITDA.Other utilities might have included a portion in the EBITDA calculations as there will be a loss of EBITDA for the rest of the year from disposing of these facilities.
    Quarterly project adjusted EBITDA
Project adjusted EBITDA was reported as $59 million - an increase of $2.2 million over Q1 last year.This was partly due to project generation availabiltity rising from 92.7% to 97.6% Atlantic is an efficient generator of power.But adjusted EBITDA from the 5 wind assets was excluded(although income was earned for 3 months) as was income from one other facility.Also $9.6 million of general and administrative expenses(G&A) were taken from adjusted EBITDA.So the reported EBITDA figure should have been $68 million.It also is not clear whether the payment of the discretionary debt was taken from EBITDA or from the sale of the wind assets.Most utilitites use the term comparable adjusted EBITDA but ATP's figure is not comparable to other periods or other utilities.However this blog takes the position that ATP may be getting closer to discarding their project adjusted EBITDA methodology.
  EBITDA Calculations
     Atlantic Power does not own 8 or 9 facilities;it owns large parts of 28 facilities.Also it(like most utilities) reports it's earnings on an adjusted EBITDA basis.However it does not use what is called comparable adjusted EBITDA.Instead it uses project adjusted EBITDA methodology.It includes the percentage of earnings that it has of total equity in it's EBITDA calculations.In one case it owns only 50% of the total equity;this however is the exception.It also excludes G&A expenses  from EBITDA, so it's EBITDA is smaller than other utilities.It is not clear if they do include payments on discretionary debt and amortization of some loans also.These are items that Atlantic must clear up in the future.But it is clear that ATP's project adjusted EBITDA is less than what it is called total adjusted EBITDA.And it is not comparable adjusted EBITDA.
     Guidance for 2015
  Atlantic Power gave guidance in it's annual report of project adjusted EBITDA of $265 to $285 million.In this quarterly report it changed it's guidance to $200 to $220 million.This is after 5 wind assets have been sold.But this might be as high as $285 to $300 million if ATP used a comparable adjusted EBITDA.