Zamir Rauf Executive Vice President and CFO, Calpine Corp.

Transcription

1 Wolfe Research Power & Gas Leaders Conference Zamir Rauf Executive Vice President and CFO, Calpine Corp. September 7, 16

2 Safe Harbor Statement Forward-Looking Statements The information contained in this presentation includes certain estimates, projections and other forward-looking information that reflect Calpine s current views with respect to future events and financial performance. These estimates, projections and other forward-looking information are based on assumptions that Calpine believes, as of the date hereof, are reasonable. Inevitably, there will be differences between such estimates and actual results, and those differences may be material. There can be no assurance that any estimates, projections or forward-looking information will be realized. All such estimates, projections and forward-looking information speak only as of the date hereof. Calpine undertakes no duty to update or revise the information contained herein other than as required by law. You are cautioned not to place undue reliance on the estimates, projections and other forward-looking information in this presentation as they are based on current expectations and general assumptions and are subject to various risks, uncertainties and other factors, including those set forth in Calpine s Quarterly Reports on Form 1-Q for the three months ended June, 16, its Annual Report on Form 1-K for the year ended December 1, 15 and in other documents that Calpine files with the SEC. Many of these risks, uncertainties and other factors are beyond Calpine s control and may cause actual results to differ materially from the views, beliefs and estimates expressed herein. Calpine s reports and other information filed with the SEC, including the risk factors identified in its Annual Report on Form 1-K for the year ended December 1, 15 and its Quarterly Report on Form 1-Q for the three months ended June, 16 can be found on the SEC s website at and on Calpine s website at Reconciliation to U.S. GAAP Financial Information The following presentation includes certain non-gaap financial measures as defined in Regulation G under the Securities Exchange Act of 194, as amended. Schedules are included herein that reconcile the non-gaap financial measures included in the following presentation to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP.

3 National Portfolio of More Than 7, MW Geographic Diversity Dispatch Technology As of 6//16 Geographically diversified portfolio: Scale in America s most competitive power markets Largest operator of combined heat and power (cogeneration) technology in America Largest geothermal power producer in America Featuring one of smallest environmental footprints in America s power generation sector

4 Nation s Largest Baseload Renewable, Natural Gas and Cogeneration Power Provider Heat Rate (btu/kwh) Capacity Wtd Avg Age (Years) , 1, 8, Modern CPN DYN TLN NRG Efficient Our 15 steam-adjusted heat rate was 7,9 CO lbs/mwh SO lbs/mwh 5 4 1,5, 1,5 1, 5 Clean CPN DYN TLN NRG 6, CPN DYN TLN NRG CPN DYN TLN NRG Source: Calpine, Energy Velocity (15). CPN steam-adjusted heat rate excludes peakers. DYN reflects announced joint venture to acquire Engie portfolio. 4

5 Delivering Strong Financial Performance ($ millions) Stable Adjusted EBITDA 1 Solid Adjusted FCF 1 $1,949 $1,976 $1,8 - $1,9 $1,76 $1,749 $1,8 $8 $84 $71 - $81 $489 $564 $ E No Near Term Debt Maturities E Strong Adjusted FCF 1 Per Share Senior Secured Term Loans Senior Secured Notes CCFC TL Project Debt Senior Unsecured Notes $,98 $,859 $. $.1 $. - $.5 $66 $89 $1,14 $1,55 $65 $1.1 $1. $ E 1 A non-gaap financial measure. Reconciliations of Adjusted EBITDA and Adjusted Recurring Free Cash Flow to Net Income, the most comparable U.S. GAAP measure, are included in the appendix and on our website. 16E as of 7/9/16. The debt maturity schedule shown here is not prepared on a U.S. GAAP basis and does not conform to the debt maturity schedule presented in Calpine s Form 1-K. (Refer to the Form 1-K for further information regarding U.S. GAAP-basis debt maturities). Assumptions used in debt maturity charts shown here are as follows: (i) excludes letter of credit facilities; (ii) maturity balances assume cash sweeps; and (iii) all other debt maturities are paid from operating cash flows at the project level. Project debt in 19 represents projected balance for OMEC ($8M) and Steamboat ($56M). Put price in the OMEC PPA approximates the projected debt balance. 5

6 Transformation of the Nation s Electric Markets Secular Trends Driving Significant Change in Power Sector Low natural gas prices Scale and scope of environmental regulations Renewables penetration Flexible resources CCGT, CT Baseload resources Coal, Nuclear, Gas Steamers Pointing to Increasing Role for Natural Gas Most Scenarios Suggest Continuation of Recent Trends Natural Gas Used for Power Generation Already at All Time High 1 1% 75% Clean Power Plan Natural Gas Burned for Power Generation (Bcf/d) % of Total U.S. Electricity Production 1% 75% 5% 5% % Gas Already Taking Share from Coal Coal Nat Gas Other Nuclear Renewable 5% 5% % 1% 75% 5% Clean Energy Pledge 5% 1 Source: Bloomberg. Source: EIA. Assumes 5% of US electricity from carbon-free resources. % 5 6

7 Strategically Positioning Calpine for Long-Term Success Sale of Mankato Power Plant Accretive Monetization of Non-Core Position Key terms: $95.5 million proceeds 75 MW CCGT in Mankato, MN (MISO) Current contract expires 6 Avoids $4 million in Growth CapEx (expansion) Expected close: 4Q16 Southeast 6,54 MW 6% Re-allocating capital to dynamic competitive markets 8: Today*: North,8 MW 1% West East West North 6,17 MW 7,46 MW Region 9,145 MW 5% % 6% 77 plants.8 GW Texas 7,487 MW % SE 1,19 MW 4% 79 plants 5.6 GW + Retail Texas 9,7 MW 5% * Shown pro forma for announced sales of South Point (West), Osprey (Southeast) and Mankato (North), shut-ins at Clear Lake (Texas) and Sutter (West), and inclusive of York Expansion. Securing strong customer relationships Continued Value Creation $67 ~14x EV/EBITDA ~$45 Term Contracts Signed (MW),,5, 1,5 1, 5 Enabled substantial exit from Southeast Upcoming Sale Proceeds 17 Adj. EBITDA Impact Osprey South Point Mankato 1 Also includes Adjusted EBITDA from Sutter Energy Center and Clear Lake Power Plant. All Adj. EBITDA impact relative to H16 West Texas East Southeast Retail Contracts with duration greater than one year, originated in year shown. Champion Energy, acquired as of 4Q activity includes full year. 7

8 Disciplined Capital Allocation with Tailwinds as Upside Shifting capital allocation at with a value opportunity for value ($ millions) Remaining 16 capital focused on debt High FCF Yield with High Quality EBITDA 4,5 $67 Potential $57M of callable 7⅞% Sr. Secured Notes ~15% $1,56 $(9) $56M for Granite Ridge Acquisition ~9% $(811) $4 ~5% 75% Conversion Available Capital, YE FCF ($ millions) $85 1 Asset Sale Proceeds Debt Paydown & Amortization $5 Acquisition & Growth CapEx Growth CapEx Decreasing < $5 Available Capital, 1Q17 Debt Yield Prior 5-year Avg. FCF Yield 16 FCF Yield Potential Upside Adjusted EBITDA Unlevered FCF Texas & California at cyclical lows Rising natural gas prices Increasing need for flexible gas to integrate renewables Rising capacity prices in the East; Upside from transition to 1% Capacity Performance Retail growth Disciplined capital allocation 16E 17E 18E 1 Represents Cash and Cash Equivalents as of 1/1/15, plus 16E Adj. Free Cash Flow (midpoint), less $1 million of minimum cash on hand, and $4 million of working capital and timing differences. Includes $84 million of financing fees, hedges and premiums. Assumes a 1/1/17 close for Osprey, South Point and Mankato sales. 4 A non-gaap financial measure. Reconciliations of Adj. EBITDA and Adj. FCF to Net Income (Loss), the most comparable U.S. GAAP measure, are included in the appendix and on our website. 5 Based on midpoint of 16 guidance for Adjusted EBITDA and Adjusted Free Cash Flow. FCF Yield based upon closing stock price as of 9//16. 8

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