Exhibit 99.1
News Release
| Investor Relations and Media contacts: |  | |
Steve Himes, 678 579 3655 steve.himes@mirant.com | ||
Audrey Emerson, 678 579 3231 audrey.emerson@mirant.com |
Stockholder inquiries: | ||
| 678 579 7777 |
November 6, 2009
Mirant Reports Third Quarter 2009 Results
| • | Income from continuing operations of $55 million compared to income from continuing operations of $1.607 billion for the third quarter of 2008 |
| • | Adjusted EBITDA from continuing operations of $311 million compared to adjusted EBITDA from continuing operations of $278 million for the third quarter of 2008 |
| • | Reduced 2009 adjusted EBITDA guidance from $873 million to $860 million |
| • | Increased 2010 adjusted EBITDA guidance from $570 million to $617 million |
ATLANTA – Mirant Corporation (NYSE: MIR) today reported income from continuing operations for the third quarter of 2009 of $55 million compared to income from continuing operations of $1.607 billion for the same period in 2008. Results for 2009 include unrealized losses, principally on hedges, of $174 million compared to unrealized gains, again principally on hedges, of $1.395 billion for 2008. Per share results from continuing operations for the third quarter of 2009 were $0.38 per share, compared to $8.69 per share from continuing operations for the third quarter of 2008.
Net Income to Adjusted Income from Continuing Operations and Adjusted EBITDA
| (in millions except per share) | Quarter Ending September 30, 2009 | Quarter Ending September 30, 2008 | ||||||||||||
| Per Share 1 | Per Share 1 | |||||||||||||
Net income | $ | 55 | $ | 0.38 | $ | 1,607 | $ | 8.69 | ||||||
Unrealized (gains) losses | 174 | 1.19 | (1,395 | ) | (7.54 | ) | ||||||||
Other | 9 | 0.06 | 4 | 0.02 | ||||||||||
Adjusted income from continuing operations | $ | 238 | $ | 1.63 | $ | 216 | $ | 1.17 | ||||||
Provision (benefit) for income taxes | 3 | (5 | ) | |||||||||||
Interest expense, net | 33 | 32 | ||||||||||||
Depreciation and amortization | 37 | 35 | ||||||||||||
Adjusted EBITDA | $ | 311 | $ | 278 | ||||||||||
| 1 | Per share amounts for 2009 are based on diluted weighted average shares outstanding of 146 million. Per share amounts for 2008 are based on diluted weighted average shares outstanding of 185 million. |
Mirant reported adjusted income from continuing operations of $238 million for the third quarter of 2009, or $1.63 per diluted share, compared to adjusted income from continuing operations of $216 million for the same period of 2008, or $1.17 per diluted share. Adjusted income from continuing operations excludes unrealized gains and losses and other non-recurring items. The quarter over quarter increase resulted principally from higher realized gross margins.
Adjusted EBITDA from continuing operations for the third quarter of 2009 was $311 million, compared to adjusted EBITDA from continuing operations of $278 million for the third quarter of 2008. The increase in adjusted EBITDA resulted principally from higher realized value of hedges and higher realized results from proprietary trading activities, partially offset by lower energy gross margins from generation.
Net cash provided by operating activities of continuing operations for the third quarter of 2009 was $290 million compared to net cash provided by operating activities of continuing operations of $632 million for the same period in 2008. The decrease was primarily the result of significant cash collateral returned in the third quarter of 2008.
Nine Months 2009 versus Nine Months 2008
Mirant reported income from continuing operations of $598 million for the first nine months of 2009, compared to income from continuing operations of $621 million for the same period in 2008. Results for 2009 include unrealized gains, principally on hedges, of $66 million compared to unrealized gains, again principally on hedges, of $218 million for 2008. Per share results from continuing operations for the first nine months of 2009 were $4.12 per share, compared to $2.86 per share from continuing operations for the same period in 2008.
Net Income to Adjusted Income from Continuing Operations and Adjusted EBITDA
| (in millions except per share) | Year to Date September 30, 2009 | Year to Date September 30, 2008 | ||||||||||||||
| Per Share 1 | Per Share 1 | |||||||||||||||
Net income | $ | 598 | $ | 4.12 | $ | 672 | $ | 3.10 | ||||||||
Income from discontinued operations | — | — | 51 | 0.24 | ||||||||||||
Income from continuing operations | 598 | 4.12 | 621 | 2.86 | ||||||||||||
Unrealized gains | (66 | ) | (0.45 | ) | (218 | ) | (1.00 | ) | ||||||||
Bankruptcy charges and legal contingencies | (62 | ) | (0.43 | ) | 4 | 0.02 | ||||||||||
Other | 14 | 0.10 | 33 | 0.15 | ||||||||||||
Adjusted income from continuing operations | $ | 484 | $ | 3.34 | $ | 440 | $ | 2.03 | ||||||||
Provision for income taxes | 11 | 5 | ||||||||||||||
Interest expense, net | 102 | 79 | ||||||||||||||
Depreciation and amortization | 109 | 108 | ||||||||||||||
Adjusted EBITDA | $ | 706 | $ | 632 | ||||||||||||
| 1 | Per share amounts for 2009 are based on diluted weighted average shares outstanding of 145 million. Per share amounts for 2008 are based on diluted weighted average shares outstanding of 217 million. |
Mirant reported adjusted income from continuing operations of $484 million for the first nine months of 2009, or $3.34 per diluted share, compared to adjusted income from continuing operations of $440 million for the same period in 2008, or $2.03 per diluted share. Adjusted income from continuing operations excludes unrealized gains, the MC Asset Recovery settlement with Southern Company and other non-recurring items. The period over period increase resulted principally from higher realized gross margins partially offset by higher net interest expense.
Adjusted EBITDA from continuing operations for the first nine months of 2009 was $706 million, compared to adjusted EBITDA from continuing operations of $632 million for the same period in 2008. The period over period increase resulted principally from higher realized value of hedges and higher realized results from proprietary trading activities, partially offset by lower energy gross margins from generation.
Net cash provided by operating activities of continuing operations during the first nine months of 2009 was $721 million compared to net cash provided by operating activities of continuing operations of $587 million in the same period of 2008. The increase was primarily the result of working capital changes and higher realized gross margins.
As of September 30, 2009, Mirant had cash and cash equivalents of $2.029 billion, of which $574 million was restricted at Mirant North America and its subsidiaries and not available for distribution to Mirant. The company expects Mirant North America will distribute approximately $116 million to its parent, Mirant Americas Generation, in November 2009. Although the company expects Mirant North America to remain in compliance with its financial covenants, it is likely it will be restricted from making distributions in future periods, beyond permitted interest payable by its parent, primarily because of the significant capital expenditure program underway to comply with the Maryland Healthy Air Act. Upon completion of its capital expenditure program, and after such expenditures no longer affect the free cash flow calculation, Mirant North America
is expected to be able again to make distributions. Mirant does not expect the potential restriction on future distributions to have any effect on its operations.
As of September 30, 2009, Mirant had total outstanding debt of $2.633 billion.
Guidance
Mirant today reduced its 2009 adjusted EBITDA guidance from $873 million to $860 million and increased its 2010 adjusted EBITDA guidance from $570 million to $617 million.
“In these challenging economic times during which prices for commodities, including electricity, have remained at relatively low levels, our strategy of hedging has mitigated the impact on Mirant in 2009 and somewhat in 2010,” said Edward R. Muller, chairman and chief executive officer. “Hedging, together with our balance sheet that provides adequate liquidity for our business, has kept us financially healthy.”
Earnings Call
Mirant is hosting an earnings call today to discuss its third quarter 2009 financial results. The call will be held from 9-10 a.m. EST. The conference call can be accessed via the investor relations section of the company’s website atwww.mirant.com or analysts are invited to listen to the call by dialing 888 213 3710 (International 913 312 0654) and entering pass code 4279837.
Presentation slides for the analyst call have been posted to the company’s website. The presentation may include certain non-GAAP financial measures as defined under SEC rules. In such event, a reconciliation of those measures to the most directly comparable GAAP measures will also be available via the investor relations section of the company’s website atwww.mirant.com.
A recording of the event will be available for playback on the company’s website beginning today at noon EST. A replay also will be available by dialing 888 203 1112 (International 719 457 0820) and entering the pass code 4279837.
Mirant is a competitive energy company that produces and sells electricity in the United States. Mirant owns or leases approximately 10,112 megawatts of electric generating capacity. The company operates an asset management and energy marketing organization from its headquarters in Atlanta. For more information, please visitwww.mirant.com.
Regulation G Reconciliations
Net Income to Adjusted Income from Continuing Operations and Adjusted EBITDA
| (in millions except per share) | Quarter Ending September 30, 2009 | Quarter Ending September 30, 2008 | ||||||||||||||
| Per Share 1 | Per Share 1 | |||||||||||||||
Net income | $ | 55 | $ | 0.38 | $ | 1,607 | $ | 8.69 | ||||||||
Unrealized (gains) losses | 174 | 1.19 | (1,395 | ) | (7.54 | ) | ||||||||||
Impairment losses | 14 | 0.10 | — | — | ||||||||||||
Lower of cost or market inventory adjustments, net | (6 | ) | (0.04 | ) | — | — | ||||||||||
Other | 1 | — | 4 | 0.02 | ||||||||||||
Adjusted income from continuing operations | $ | 238 | $ | 1.63 | $ | 216 | $ | 1.17 | ||||||||
Provision (benefit) for income taxes | 3 | (5 | ) | |||||||||||||
Interest expense, net | 33 | 32 | ||||||||||||||
Depreciation and amortization | 37 | 35 | ||||||||||||||
Adjusted EBITDA | $ | 311 | $ | 278 | ||||||||||||
| 1 | Per share amounts for 2009 are based on diluted weighted average shares outstanding of 146 million. Per share amounts for 2008 are based on diluted weighted average shares outstanding of 185 million. |
Adjusted income from continuing operations and adjusted EBITDA are non-GAAP financial measures. Management and some members of the investment community utilize adjusted income from continuing operations and adjusted EBITDA to measure financial performance on an ongoing basis. These measures are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. In evaluating these adjusted measures, the reader should be aware that in the future Mirant may incur expenses similar to the adjustments set forth above.
Net Income to Adjusted Income from Continuing Operations and Adjusted EBITDA
| (in millions except per share) | Year to Date September 30, 2009 | Year to Date September 30, 2008 | ||||||||||||||
| Per Share 1 | Per Share 1 | |||||||||||||||
Net income | $ | 598 | $ | 4.12 | $ | 672 | $ | 3.10 | ||||||||
Income from discontinued operations | — | — | 51 | 0.24 | ||||||||||||
Income from continuing operations | 598 | 4.12 | 621 | 2.86 | ||||||||||||
Unrealized gains | (66 | ) | (0.45 | ) | (218 | ) | (1.00 | ) | ||||||||
Bankruptcy charges and legal contingencies | (62 | ) | (0.43 | ) | 4 | 0.02 | ||||||||||
Severance and bonus plan for dispositions | 13 | 0.09 | 14 | 0.06 | ||||||||||||
Impairment losses | 14 | 0.10 | — | — | ||||||||||||
Lovett shut down costs | 4 | 0.03 | 10 | 0.05 | ||||||||||||
Lower of cost or market inventory adjustments, net | (17 | ) | (0.12 | ) | — | — | ||||||||||
Loss on repurchase of MAG 2011 bonds | — | — | 8 | 0.04 | ||||||||||||
Other | — | — | 1 | — | ||||||||||||
Adjusted income from continuing operations | $ | 484 | $ | 3.34 | $ | 440 | $ | 2.03 | ||||||||
Provision for income taxes | 11 | 5 | ||||||||||||||
Interest expense, net | 102 | 79 | ||||||||||||||
Depreciation and amortization | 109 | 108 | ||||||||||||||
Adjusted EBITDA | $ | 706 | $ | 632 | ||||||||||||
| 1 | Per share amounts for 2009 are based on diluted weighted average shares outstanding of 145 million. Per share amounts for 2008 are based on diluted weighted average shares outstanding of 217 million. |
Adjusted income from continuing operations and adjusted EBITDA are non-GAAP financial measures. Management and some members of the investment community utilize adjusted income from continuing operations and adjusted EBITDA to measure financial performance on an ongoing basis. These measures are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance. In evaluating these adjusted measures, the reader should be aware that in the future Mirant may incur expenses similar to the adjustments set forth above.
Current Expected Cash Flow from Operations to Projected Adjusted EBITDA Guidance
For the years ending December 31, 2009 and 2010
| (in millions) | Year Ending December 31, 2009 | Year Ending December 31, 2010 | ||||||
Net cash provided by operating activities of continuing operations | $ | 693 | $ | 316 | ||||
Emission allowance sales proceeds | 21 | 7 | ||||||
Capitalized interest | (72 | ) | (6 | ) | ||||
Adjusted net cash provided by operating activities | $ | 642 | $ | 317 | ||||
Interest, net (including amounts capitalized) | 193 | 186 | ||||||
Income taxes paid (refund) | 9 | (20 | ) | |||||
Working capital and other changes | 16 | 134 | ||||||
Adjusted EBITDA | $ | 860 | $ | 617 | ||||
Adjusted EBITDA and adjusted net cash provided by operating activities are non-GAAP financial measures. Management and some members of the investment community utilize adjusted EBITDA and adjusted net cash provided by operating activities to measure financial performance on an ongoing basis. These measures are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance.
Previous Expected Cash Flow from Operations to Projected Adjusted EBITDA Guidance
For the years ending December 31, 2009 and 2010
| (in millions) | Year Ending December 31, 2009 | Year Ending December 31, 2010 | ||||||
Net cash provided by operating activities of continuing operations | $ | 671 | $ | 389 | ||||
Emission allowance sales proceeds | 21 | 9 | ||||||
Capitalized interest | (68 | ) | (5 | ) | ||||
Adjusted net cash provided by operating activities | $ | 624 | $ | 393 | ||||
Interest, net (including amounts capitalized) | 191 | 178 | ||||||
Income taxes paid (refund) | 12 | (20 | ) | |||||
Working capital and other changes | 46 | 19 | ||||||
Adjusted EBITDA | $ | 873 | $ | 570 | ||||
Adjusted EBITDA and adjusted net cash provided by operating activities are non-GAAP financial measures. Management and some members of the investment community utilize adjusted EBITDA and adjusted net cash provided by operating activities to measure financial performance on an ongoing basis. These measures are not recognized in accordance with GAAP and should not be viewed as an alternative to GAAP measures of performance.
Cautionary Language Regarding Forward-Looking Statements
Some of the statements included herein involve forward-looking information. Mirant cautions that these statements involve known and unknown risks and that there can be no assurance that such results will occur. There are various important factors that could cause actual results to differ materially from those indicated in the forward-looking statements, such as, but not limited to, legislative and regulatory initiatives regarding deregulation, regulation or restructuring of the industry of generating, transmitting and distributing electricity (the “electricity industry”); changes in state, federal and other regulations affecting the electricity industry (including rate and other regulations); changes in, or changes in the application of, environmental and other laws and regulations to which Mirant and its subsidiaries and affiliates are or could become subject; the failure of Mirant’s plants to perform as expected, including outages for
unscheduled maintenance or repair; environmental regulations that restrict Mirant’s ability or render it uneconomic to operate its business, including regulations related to the emission of CO2 and other greenhouse gases; increased regulation that limits Mirant’s access to adequate water supplies and landfill options needed to support power generation or that increases the costs of cooling water and handling, transporting, and disposing off-site of ash and other byproducts; changes in market conditions, including developments in the supply, demand, volume and pricing of electricity and other commodities in the energy markets, including efforts to reduce demand for electricity, and the extent and timing of the entry of additional competition in our markets; continued poor economic and financial market conditions, including impacts on financial institutions and other current and potential counterparties and negative impacts on liquidity in the power and fuel markets in which Mirant and its subsidiaries hedge and transact; increased credit standards, margin requirements, market volatility or other market conditions that could increase Mirant’s obligations to post collateral beyond amounts that are expected, including additional collateral costs associated with over-the-counter hedging activities as a result of proposed over-the-counter regulation; Mirant’s inability to access effectively the over-the-counter and exchange-based commodity markets or changes in commodity market conditions and liquidity, including as a result of proposed over-the-counter regulation, which may affect Mirant’s ability to engage in asset management, proprietary trading and fuel oil management activities as expected, or result in material extraordinary gains or losses from open positions; deterioration in the financial condition of Mirant’s counterparties and the resulting failure to pay amounts owed to Mirant or to perform obligations due to Mirant beyond collateral posted; hazards customary to the power generation industry and the possibility that Mirant may not have adequate insurance to cover losses resulting from such hazards or the inability of Mirant’s insurers to provide agreed upon coverage; price mitigation strategies employed by ISOs or RTOs that reduce Mirant’s revenue and may result in a failure to compensate Mirant’s generation units adequately for all their costs; changes in the rules used to calculate capacity and energy payments; legal and political challenges to the rules used to calculate capacity, energy and ancillary services payments; volatility in Mirant’s gross margin as a result of Mirant’s accounting for derivative financial instruments used in its asset management, proprietary trading and fuel oil management activities and volatility in its cash flow from operations resulting from working capital requirements, including collateral, to support its asset management, proprietary trading and fuel oil management activities; Mirant’s ability to enter into intermediate and long-term contracts to sell power and to obtain adequate supply and delivery of fuel for its facilities, at Mirant’s required specifications and on terms and prices acceptable to it; the failure to utilize new or advancements in power generation technologies; the inability of Mirant’s operating subsidiaries to generate sufficient cash flow to support its operations; the potential limitation or loss of Mirant’s net operating losses notwithstanding the implementation of a stockholder rights plan; Mirant’s ability to borrow additional funds and access capital markets; strikes, union activity or labor unrest; Mirant’s ability to obtain or develop capable leaders and its ability to retain or replace the services of key employees; weather and other natural phenomena, including hurricanes and earthquakes; the cost and availability of emissions allowances; curtailment of operations and reduced prices for electricity resulting from transmission constraints; Mirant’s inability to complete construction of Mirant’s emissions reduction equipment by January 2010 to meet the requirements of the
Maryland Healthy Air Act, which may result in reduced unit operations and reduced cash flows and revenues from operations; Mirant’s ability to execute its business plan in California, including entering into new tolling arrangements in respect of its existing generating facilities and, in respect of its Marsh Landing generating facility, (i) obtaining the permits necessary for construction and operation of the generating facility, (ii) securing the necessary project financing for construction of the generating facility, and (iii) completing the construction of the generating facility by May 2013; Mirant’s relative lack of geographic diversification in revenue sources resulting in concentrated exposure to the Mirant Mid-Atlantic market; the ability of lenders under Mirant North America’s revolving credit facility to perform their obligations; war, terrorist activities, cyberterrorism and inadequate cybersecurity, or the occurrence of a catastrophic loss; the failure to provide a safe working environment for Mirant’s employees and visitors thereby increasing Mirant’s exposure to additional liability, loss of productive time, other costs, and a damaged reputation; Mirant’s consolidated indebtedness and the possibility that Mirant or its subsidiaries may incur additional indebtedness in the future; restrictions on the ability of Mirant’s subsidiaries to pay dividends, make distributions or otherwise transfer funds to Mirant, including restrictions on Mirant North America contained in its financing agreements and restrictions on Mirant Mid-Atlantic contained in its leveraged lease documents, which may affect Mirant’s ability to access the cash flow of those subsidiaries to make debt service and other payments; the failure to comply with, or monitor provisions of Mirant’s loan agreements and debt may lead to a breach and, if not remedied, result in an event of default thereunder, which would limit access to needed capital and damage Mirant’s reputation and relationships with financial institutions; and the disposition of the pending litigation described in Mirant’s Form 10-Q for the quarter ended September 30, 2009, filed with the Securities and Exchange Commission.
Mirant undertakes no obligation to update publicly or revise any forward-looking statements to reflect events or circumstances that may arise. The foregoing review of factors that could cause Mirant’s actual results to differ materially from those contemplated in the forward-looking statements included in this news release should be considered in connection with information regarding risks and uncertainties that may affect Mirant’s future results included in Mirant’s filings with the Securities and Exchange Commission at www.sec.gov.