TransAlta Corporation (TAC)

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TransAlta Corporation (TAC)

Q4 2012 Earnings Call

February 27, 2013 11:00 AM ET


Brent Ward – Director, Corporate Finance and Investor Relations

Dawn Farrell – President and CEO

Brett Gellner – CFO


Juan Plessis – Canaccord Genuity

Ben Pham – BMO Capital Markets

Mark Barnett – Morningstar Equity Research

Linda Ezergailis – TD Securities

Andrew Kuske – Credit Suisse

Robert Kwan – RBC

Philson Yim – Luminus Management

Paul Lechem – CIBC

Jeremy Rosenfield – Desjardins Capital Markets

Jeff Lewis – Financial Post

Jeremy van Loon – Bloomberg News



Hello, this is the conference operator. Welcome to the TransAlta Corporation 2012 Fourth Quarter and Year End Results Conference Call. As a reminder, all participants are in a listen-only mode, and the conference is being recorded. After the presentation, there’ll be an opportunity to ask questions.

To join the question queue, simply press star and one on your touch tone telephone. Should anyone need assistance during the conference call, you may signal an operator by pressing star and then zero on your touch tone telephone.

At this time, I’d like to turn the conference over to Brent Ward, Director, Corporate Finance and Investor Relations. Please go ahead.

Brent Ward

Thank you, Brock [ph], and good morning, everyone. I’m Brent Ward, Director of Corporate Finance and Investor Relations, welcome to TransAlta’s 2012 Fourth Quarter and Full Year Conference Call.

With me today, are Dawn Farrell, President and Chief Executive Officer, Brett Gellner, Chief Financial Officer, John Kousinioris, Chief Legal and Compliance Officer, and Todd Stack, Vice President, and Treasurer.

Earlier this morning, we released our fourth quarter and full year 2012 results. We hope you’ve had a chance to review them. For those of you who are not on our webcast, we have also posted our 2012 Q4 and full year presentation on our website under our Investors section, as we will be referring to the presentation during this call. Further information will be posted after the call.

All information during this conference call is subject to the forward-looking qualification, which is detailed in today’s news release and incorporated in full for purposes of today’s call. The amounts referenced in this review are in Canadian currency, unless otherwise stated. The non-IFRS terminology used in this call, including comparable earnings, comparable EBITDA, growth margin, funds from operations and free cash flow is reconciled in the MD&A.

Per share figures in the fourth quarter 2012 are based on an average of 255 million shares outstanding compared to 224 million shares in the fourth quarter of 2011.

For the full year, the average number of shares outstanding for 2012 is 235 million, compared to 222 million shares in 2011. Please note, the financial information has been rounded to the nearest whole number.

On today’s call, Dawn, and Brett will provide an overview of our operational and financial performance for the fourth quarter, and the full year, provide an update on recent events and activities, and before going to Q&A, Dawn will provide commentary on our outlook for 2013.

With that, let me turn the call over to Dawn.

Dawn Farrell

Thanks, Brent, and welcome everyone. Let me begin with 2012. With clearly a very busy year for TransAlta, a year of positioning TransAlta for growth through the decade. There was a lot to do, and I’m happy to report today, that most, if not all of the challenging issues are behind us. And 2013 will be a return to more normalized level of operation for TransAlta.

The repositioning of the teams into a new business model for the company has established the right configuration and momentum required to really get underneath the type of growth we want to invest in which are projects then ensure our shareholders, we continue to expect and have confidence in the long-term stability of our cash flows and income for years to come.

Let me walk you through the highlights from 2012 in more detail. We spent approximately 500 million of sustaining capital in 2012, which included the inclusion of the three-year investment program in our coal fleet, that will enable us to sustain high levels of availability and upgrade our capability. A plan we put into action at the end of 2009, and that is now complete.

Over the year, the extensive major maintenance program meant that we completed in the year, six major planned outages in our operated coal fleet, three major planned outages in the gas fleet, and a number of smaller planned outages in the wind and hydro fleets. And of course, through also two major outages in our none operated coal plants.

We did all of these timed work, and at the same time, we were able to achieve an overall fleet availability of 90%.

This means that the operating teams that TransAlta had to perform exceptionally well, under fourth outage rates. Overall, the 90% availability continues to be well above the averages we see when we benchmark all of our units, against other plants of our size, and vintage across towards America.

The operating teams undertook the routine and major maintenance work and they delivered first quartile safety performance within injury [ph], frequency rate of 0.89.

This result demonstrates our teams, they’re very capable of investing $500 million in sustaining capital well, and in a single year, and maintaining first quartile safety performance while achieving an availability of 90%, a testament, that our team is dedicated to value creation for our shareholders.

With the bulk of the major investments behind us, the operating team is now executing the next three year plan, with a more normal level of sustaining capital being invested in our fleet of approximately 350 million a year.

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