Transalta Renewables -Q3 is better than Q2 2016
On October31 Transalta Renewables released it's third quarter results;they show improvement and that it is on an upward trend.All of it's numbers are up from the same quarter in 2015.This should be no surprise as they picked up a number of assets in 2016.Both Canadian and Australian assets were transferred from it's parent- Transalta Power.In return, Transalta received cash and shares of RNW.Now about 70% of their shares are owned by Transalta (see Blogger.Workathon.com dated October 25) and the rest by mostly small Canadian investors.No schedule was given for any further transfers from Transalta.
The third Quarter
Both energy production and revenues were ahead by about 10% over 2015.But comparable EBITDA was ahead by about 33% for Q3.Comparable cash available for distribution was up by almost 50% over 2015 while adjusted funds from operations was ahead by about 40%.This large increase often indicates low interest payments and income taxes .As RNW has been able to restrict their amount of debt because it has raised sufficient equity for their needs.Lastly their dividend paid remains at $.22 for the quarter and the yield now is at about 6.8%
The year to Date
The third quarter performance was solid but a little behind the 9 month trend. As 9 month comparable EBITDA was $286 million slightly ahead of Q3 taken on an annual basis.Likewise 9 month comparable CAFD ,at $176 million, was slightly ahead of Q3 on an annual basis.Still the third quarter for 2016 was ahead of the third quarter for 2015 by a significant percentage.So, in conclusion, the transfers have only increased production and revenues by 10 to 12% but have increased EBITDA and CAFD by more. EBIDTA is always taken as the best measure of earnings and performance.Earnings increases from existing assets are likely to slow down in 2017 as this blog is not expecting any transfers from Transalta. However by then production increases will be coming in from their Australian assets. There should be a small bump in earnings in the first half but a more significant bump in the second half of 2017.This should put RNW in a good position for 2017 and for 2018 without any transfers from Transalta Power.
The third Quarter
Both energy production and revenues were ahead by about 10% over 2015.But comparable EBITDA was ahead by about 33% for Q3.Comparable cash available for distribution was up by almost 50% over 2015 while adjusted funds from operations was ahead by about 40%.This large increase often indicates low interest payments and income taxes .As RNW has been able to restrict their amount of debt because it has raised sufficient equity for their needs.Lastly their dividend paid remains at $.22 for the quarter and the yield now is at about 6.8%
The year to Date
The third quarter performance was solid but a little behind the 9 month trend. As 9 month comparable EBITDA was $286 million slightly ahead of Q3 taken on an annual basis.Likewise 9 month comparable CAFD ,at $176 million, was slightly ahead of Q3 on an annual basis.Still the third quarter for 2016 was ahead of the third quarter for 2015 by a significant percentage.So, in conclusion, the transfers have only increased production and revenues by 10 to 12% but have increased EBITDA and CAFD by more. EBIDTA is always taken as the best measure of earnings and performance.Earnings increases from existing assets are likely to slow down in 2017 as this blog is not expecting any transfers from Transalta. However by then production increases will be coming in from their Australian assets. There should be a small bump in earnings in the first half but a more significant bump in the second half of 2017.This should put RNW in a good position for 2017 and for 2018 without any transfers from Transalta Power.
Conclusion
Transalta Renewables has moved up steadily since January where it was trading at $9.00 per share.In fact in October it was trading at $15.00 per share but since has fallen back to the $13.00 area.This blog expects support at this level and sees it climbing back up to $15.00 area as the dividend yield now has risen to almost 7%. Earnings have risen in this quarter and are expected to make a bump up in the first quarter of 2017.Management says that performance is "on track to hit the upper end of guidance for 2016".
use Blogdaleupsome for business forecasts ;use Blogdaleupsome for analysis of Cdn. utilities
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