Q4 2023 Northland Power Inc Earnings Call

Okay.

Operator: Welcome to the Northland Power conference call to discuss the annual and fourth quarter 2023 results. At this time, all participants are in a listen-only mode.

Welcome to the Northland Power conference call to discuss the annual and fourth quarter 2023 results. At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised.

After the Speakers' presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message advising Johannes race to withdraw your question. Please press star one again as a reminder, this conference is being recorded on Thursday February 22024.

Operator: To withdraw your question, please press star one, one again. As a reminder, this conference is being recorded on Thursday, February 22nd, 2024 at 10 a.m. Eastern Standard Time. Conducting this call from Northland Power are Mike Crowley, President and Chief Executive Officer; Adam Beaumont, Interim Chief Financial Officer; and also joining us for the call this morning for the question and answer portion will be Dario de Marlea, Vice President and Investor Relations. Before we begin, Northland's management has asked me to remind listeners that all figures presented are in Canadian dollars and to caution that certain information presented and responses to questions may contain forward- The actual results may differ materially from management's expected or forecasted results.

10, a M eastern standard time.

Conducting this call for Northland power are Mike Crawley, President and Chief Executive Officer, Adam Beaumont Interim Chief Financial Officer, and also joining us for the call. This morning for the question and answer portion will be Dario EMR Leah.

Vice President Investor Relations before we begin north once management has asked me to remind listeners that all figures presented are in Canadian dollars and to caution that certain information presented and with sponsors to questions may contain forward looking statements, which include assumptions that are subject to very.

Its risks actual results may differ materially from management's expected or forecasted results.

Operator: Please read the following forward-looking statement section in yesterday's news press release announcing Northland Power results and be guided by its contents when making investment decisions or recommendations. The release is available at www.northlandpower.com. I will now turn the call over to Mike Crawley.

Please read the following forward looking statements section.

In Yesterdays News press release announcing Northland power results and be guided by its contents and making investment decisions or recommendations. The release is available at www Northland power Dot Com I will now turn the call over to Mike Crawley.

Mike Crawley: Thank you very much and good morning everyone, and welcome to Northland's 4th Quarter Earnings Call. I want to begin our call by emphasizing Northland's commitment to health and safety. The 2024 construction of the Heilong, Baltic Power, and Oneida projects continues forward. Ensuring a strong health and safety culture on those sites remains paramount to us.

Thank you very much and good morning, everyone and welcome to North clients fourth quarter earnings call I want to begin our call by emphasizing Northland commitment to health and safety in 2020 for construction of high long Baltic power and Oneida projects continues forward, ensuring a strong health and safety culture on those sites remains.

Paramount to us this.

Mike Crawley: This is particularly important for the high-long offshore wind project where in-water construction really ramps up later in the summer. So looking back on 2023, I am so impressed with the resilience of our employees and really proud of all that they accomplished. And as you know, I've got Adam Beaumont here who headed up capital markets in 2023 for Northline. He's got a new role now, and I'll tell you, it's in: Everybody looks great when you've got a good market and when things are going well, but when you hit some headwinds, you really see the capabilities of your team and the character of your team.

This is particularly important for the high long offshore wind project in water construction really ramps up later in the spring.

So looking back on 2023 I am so impressed with the resilience of our employees and I'm really proud of all of what they accomplished.

And as you know I've got Adam Beaumont here, who headed up capital markets in.

In 2023 for north that he's got a new role now and I'll tell you it's in.

Uh huh.

Everybody looks great. When you have got a good market and where things are going well, but when you hit some headwinds you really see the capability of your team.

And the character of your team and the whole team.

Mike Crawley: And the whole team accomplished a lot in 2023, but a lot of that was through the leadership of Adam heading up capital markets and all of our financing activities throughout the year. So, the strong performance of our facilities and delivering every targeted transaction allowed us to meet guidance for adjusted EBITDA and exceed guidance for both adjusted free cash flow and free cash flow in 2023, primarily due to high availability levels maintained across our operating fleet that allowed us to capture the full benefit of the wind and solar resources there. And in particular, the closing of the Gentari partnership at the end of December was very important.

Accomplished a lot in 2023, but a lot of that was through the leadership of that heading up capital markets and all of our financing activities through through the year.

So the strong performance of our facilities and delivering every targeted transaction allowed us to meet guidance for adjusted EBITDA and exceed guidance for both adjusted free cash flow and free cash flow in 2023.

Primarily due to high availability availability levels maintained across our operating fleet that allowed us to capture the full benefit of the wind and solar resource there.

And in particular, the closing of the Gentile partnership at the end of December was very important.

We look forward to sharing with you the construction progress on Oneida, how long and Baltic power projects as well as our 2024 financial guidance. However, we wanted to highlight we also plan to provide more detail at our upcoming Investor day on March 5th.

In terms of financing activity. It has been a momentous year for Northland with approximately $15 billion in total project and corporate financing secured it was also the first year of executing partnerships for offshore wind projects, which has been a big part of our strategy for some time.

Mike Crawley: Today, we look forward to sharing with you the construction progress on the Oneida, Heilong, and Baltic Power projects, as well as our 2024 financial guidance. However, we wanted to highlight that we also plan to provide more detail at our upcoming Investor Day on March 5th. In terms of financing activity, it has been a momentous year for Northland, with approximately $15 billion in total project and corporate financing secured. It was also the first year of executing partnerships for our offshore wind projects, which has been a big part of our strategy for some time. Indeed, our focus on forging strong partnerships, like with Mitsui and Orlin, has been a key factor in our success, especially in challenging market conditions. Orlin, for example, has been instrumental in our Baltic Power Project, leveraging its local expertise and securing a one-of-its-kind or first-of-its-kind PPA in Poland. Ms. Tsui played a critical role in the financing of the Heilong project.

Indeed, our focus on forging strong partnerships like with Mitsui and Orlando has been a key factor in our success, especially in challenging market conditions. Oregon. For example has been instrumental in our Baltic power project leveraging their local expertise in securing one of its kind a first of its kind PPA in Poland.

Mitsui played a critical role on the high long project financing.

So looking ahead, we will continue to focus on asset level partnerships and capital recycling strategy strategy not only allows us to derisk our investments, but also enables us to reinvest in new attractive opportunities by sharing development and capital cost with our partners, we accelerate project development, we diversify our opportunity set.

And with the right partners, we have enhanced our projects.

Looking at the headline numbers, we delivered an adjusted EBITDA of $389 million in the fourth quarter, an increase compared to $353 million at the same time, one year ago.

This led our.

Let our full year adjusted EBITDA 2023 to be within guidance at 124 billion.

Which was lower than $1 4 billion in 2022, primarily due to the abnormally high European energy market prices last year.

For adjusted free cash flow per share and free cash flow per share. We achieved 75 cents for both in the quarter compared to <unk> 16, and <unk>, respectively. During the same period a year earlier.

On a full year basis, we delivered adjusted free cash flow of $1 97 per share and free cash flow per share of $1 68.

Mike Crawley: Looking ahead, we will continue to focus on asset-level partnerships and capital recycling. This strategy not only allows us to de-risk our investments but also enables us to reinvest in new attractive opportunities. By sharing development and capital costs with our partners, we accelerate project development, we diversify our opportunity set, and with the right partners, we enhance our projects. Looking at the headline numbers, we delivered an adjusted EBITDA of $389 million in the fourth quarter, an increase compared to $353 million at the same time one year ago. This led our full-year adjusted EBITDA in 2023 to be within guidance at $1.24 billion, which was lower than $1.4 billion in 2022, primarily due to the abnormally high European energy market prices last year. For adjusted free cash flow per share and free cash flow per share, we achieved $0.75 for both in the quarter compared to $0.16 and $0.06, respectively, during the same period a year earlier.

Adam will provide a more detailed look into the financial numbers later in the call as well as details for our 2024 financial guidance at this time I'd like to provide you with more details on our key achievements in 2023.

During the year, we completed financial close of our two major offshore wind project high log in Taiwan, and Baltic power in Poland. In addition, we completed financial close of the Oneida battery storage facility in Ontario.

In total this resulted in Northland, along with our partner securing approximately $11 billion of nonrecourse debt financing across all three of those projects.

This represents two four gigawatts of gross capacity that is now under construction or approximately one gigawatt net to Northland.

We also issued our first green corporate hybrid bond in June and in December we up financed <unk> credit facility and separately re profiled the Spain portfolio project debt payments to align with the expected future cash flow profiles on those assets.

As I said earlier 2023 was the first year, we closed several new partnerships as part of our strategy that we set out a couple of years ago, including seeing sell downs.

Selling down at 24, 5% stake in our early stage offshore wind Scott Scott Wind project in Scotland to ESP.

Leading Irish utility.

So down 49% stake of our early stage projects in Taiwan to Gen <unk>, and lastly, and most significantly we.

We sold down or closed a 49% sell down of our stake in high long to our partner Gen. Terry for equity commitments of approximately $1 billion.

Mike Crawley: On a full year basis, we deliver adjusted free cash flow of $1.97 per share and free cash flow per share of $1.68. Adam will provide a more detailed look into the financial numbers later in the call, as well as details for our 2024 financial guidance. At this time, I'd like to provide you with more details on our key achievements in 2023. During the year, we completed the financial close on our two major offshore wind projects, Heilong in Taiwan and Baltic Power in Poland. In addition, we completed the financial close on the Oneida Battery Storage Facility in Ontario.

In addition to all of this we reached commercial operations for our 220 megawatt New York Wind projects and 130 megawatt solar project in Mexico. These facilities are now generating cash flow and in the case of the New York projects under a 20 year government backed PPA.

So looking ahead, our priority and our focus are to deliver Oneida, how long and Baltic power projects on time and on budget. All three projects continue to advance the construction activities as per schedule with certain work streams tracking ahead of schedule on.

On high long fabrication of foundations cables and Substations, both onshore and offshore are moving forward. We're also laying the groundwork for an water construction set to commence in the spring ensuring that we're going to be on track for all our project milestones on.

Baltic power early construction activities continued throughout the fall with the fabrication of critical critical components, such as the onshore substation foundation that export cables already underway.

Mike Crawley: In total, this results in Northland, along with our partners, securing approximately $11 billion of non-recourse debt financing across all three of those projects. This represents 2.4 gigawatts of gross capacity that is now under construction or approximately one gigawatt net to Northland. We also issued our first green corporate hybrid bond in June, and in December, we up-financed EPSA's credit facility and separately re-profiled the Spain portfolio project debt payments to align with the expected future cash flow profiles on those assets. As I said earlier, 2023 was the first year that we closed several new partnerships as part of a strategy that we set out a couple of years ago, including selling down a 24.5% stake in our early-stage offshore wind ScotWind project in Scotland to ESB, a leading Irish utility.

And lastly on the Oneida battery storage project fabrication of essential components like battery packs and Transformers alongside the pouring of concrete foundation pads has begun keeping our construction on that project on track.

We look forward to providing more detailed updates on all three of these projects at Investor Day on March 5th.

I would now like to turn our attention to some positive industry tailwind that we've been observing over the past few months the global demand for renewable energy has been stronger than ever global climate change targets remain strong and even stronger than what we have seen the four showcasing government support for renewables commodity prices are declining.

Inflation and rising interest rates have slowed.

And Ah receding and multiple new large projects have announced their intent to move forward.

Power market prices have been increasing notably as we saw recent auction results in the U K and the U S. Principally in New York State.

We're also seeing strong demand driven by AI and data centers, which represent potentially trillions of dollars of new investments for the tech industry, such investments will require a huge amount of power. So currently data centers AI in crypto currencies.

Mining consume 480, terawatt hours of demand approximately about two which is about 2% of global energy consumption.

Driven by the high power requirements for that computing and cooling of the data centers by 2026, the International Energy Agency in Paris estimate this sector of demand could top 1000 Terawatt hours, just two years from now more than doubling from current levels. This equates to roughly the current <unk>.

Mike Crawley: We sold out a 49% stake in our early-stage projects in Taiwan to Gentari, and lastly, and most significantly, we closed a 49% sell-down of a stake in Heilong to our partner, Gentari, for equity commitments of approximately $1 billion. In addition to all of this, we reached commercial operations for our 220-megawatt New York wind projects and 130-megawatt solar projects in Mexico. These facilities are now generating cash flow, and in the case of the New York projects, under a 20-year government-backed PPA. So looking ahead, our priority and our focus are to deliver the Oneida, Heilong, and Baltic Power projects on time and on budget. All three projects continue to advance their construction activities as per schedule, with certain work streams tracking ahead of schedule.

Electricity consumption of all of Japan.

AI and data center demand anticipated by the International Energy agency in their base case scenario is to grow by 12% CAGR approximately with overall electricity growth typically closer to 2%.

This segment of consumption is typically served by renewable electricity, representing a growing opportunity for ipp's like Northland as major technology companies have significant decarbonization pledges.

We are excited about the future for renewable energy and have a sizable development pipeline that will position us to capitalize on these positive industry trends.

As part of our financial outlook that Adam will discuss to date, we plan to allocate $60 million towards development activities. This year. However.

However, we will be selectively deploying our development capital and markets and technologies, where we can leverage our competitive advantage our experience and our capabilities.

Following our outlook guidance that was published yesterday Northland, we'll be advancing onshore opportunities within Alberta, Ontario, New York, and we will continue to develop offshore opportunities in Scotland in South Korea.

In relation to our existing early stage projects in those markets.

Mike Crawley: On Heilong, fabrication of foundations, cables, and substations both onshore and offshore is moving forward. We are also laying the groundwork for in-water construction set to commence in the spring, ensuring that we're going to be on track for all our project milestones. On Baltic Power, early construction activities continued throughout the fall, with the fabrication of critical components such as the onshore substation, foundations, and export cables already underway.

The focus will remain will mean that we will no longer pursue any new development work in Mexico or Colombia.

While we look to double down our growth and a narrower set of markets.

Northland remains disciplined by only pursuing projects that meet our investment criteria and create shareholder value. This means not being shy to exit opportunities that don't meet that objective and an example of this in 2023 was our strategic exit from the North Sea cluster wind projects in Germany achieve.

A modest premium on our way out of those projects over the over our investment cost.

While these decisions are not easy they demonstrate Northland financial discipline and reflect our promise to shareholders.

Mike Crawley: And lastly, on the Oneida battery storage project, fabrication of essential components like battery packs and transformers alongside the pouring of concrete foundation pads has begun, keeping our construction on that project on track. We look forward to providing more detailed updates on all three of these projects at Investor Day in March. I would now like to turn our attention to some positive industry tailwinds that we've been observing over the past few months. Global demand for renewable energy has been stronger than ever. Global climate change targets remain strong, and even stronger than what we have seen before, showcasing government support for renewables. Meanwhile, commodity prices are declining.

With our now 12 gigawatt development pipeline that we feel confident in our own growth ambitions.

Having the flexibility to be selective and pivot pending on market conditions and it enables our asset recycling strategy, which we will speak to in greater detail at our Investor day.

Overall, it was a very productive year for Northland, where we delivered our objectives and have set up for a strong set up a strong springboard for 2024.

I would like to thank all of our employees and partners, who have been an integral part of Northland success. At this time I would like to in particular to take the opportunity to separately think Pauline Alan can Danny and David puzzle for their outstanding leadership during their dedicated years of service at Northland. They both been a critical part of our leadership.

Over the last several years.

Now is north of that embarks on the critical construction phase of our three major projects. This presents an opportunity to bring in new leaders bring a fresh perspective expertise and vision to support our current focus on execution. While also looking ahead to further growth down the road.

Mike Crawley: Inflation and rising interest rates have slowed and are receding, and multiple new large projects have announced their intent to move forward. Power market prices have been increasing, notably as we saw recent auction results in the UK and the US, principally in New York State. We are also seeing strong demand driven by AI and data centers, which represent potentially trillions of dollars in new investments for the tech industry. Such investments will require a huge amount of power. So currently, data centers, AI, and cryptocurrencies consume 480 TWh of demand, which is about 2% of global energy consumption, driven by the high power requirements for computing and cooling of the data centers.

With the ongoing comprehensive global search for a new CFO, considering internal and external candidates. We are fortunate to have Adam Beaumont lead us through this transition now many of you know Adam quite well, it's been with Northland for over 13 years, where he has contributed to a remarkable evolution is deep understanding of our business.

<unk> culture has been instrumental in our journey.

Experience combined with his strong relationships the Northland across the financial industry industry positions and perfectly to lead us through this transition.

We're also excited to have Toby admin join us as the new executive Vice President of the offshore wind business unit Toby brings a wealth of offshore wind execution operation.

And joint venture management experience, which will be the catalyst for our offshore wind business going forward. Prior to his most recent role as chief operating officer of Maple power Toby spent more than a decade at RW.

Mike Crawley: By 2026, the International Energy Agency in Paris estimates this sector of demand could top 1,000 terawatt hours, to answer any questions you may have. AI and data center demand anticipated by the International Energy Agency in their base case scenario is to grow by 12% CAGR, approximately, with overall electricity growth typically closer. This segment of consumption is typically served by renewable electricity, representing a growing opportunity for IPPs like Northland, as major technology companies have significant decarbonization pledges. We are excited about the future of renewable energy and have a sizable development pipeline that will position us to capitalize on these positive industry trends. As part of our financial outlook that Adam will discuss today, we plan to allocate $60 million towards development activities this year.

Large majority of which he spent his approach a director for two large offshore wind projects in the U K.

His previous experience at both offshore wind project execution and executive leadership gives him the unique skill set to lead us through this new chapter of our offshore wind business.

So with that I will now turn the call over to Adam for a detailed review of our financial results.

Thank you, Mike and good morning, everyone before we dive into the specifics of the quarter and the year behind us I would like to Echo Mike's comments and share my thanks, and appreciation for Pauline leadership and support over the last four years. She had a huge impact on our organization and we wish her well in her next adventure.

As Mike alluded to it was a successful year and a strong quarter to close off 2023 for Northland.

In total we executed approximately $15 billion.

Corporate and project financings.

This included closing the judiciary partnership late in the quarter, where we use the proceeds from the transaction to repay our short term bridge facility and will fund our remaining equity in the project.

Terry will now also contribute its share of the equity along with us until first draw as much which is expected shortly.

In December we completed three other financings, including.

Securing final tax equity for approximately $300 million for our two onshore wind projects in New York Bluestone and ball Hill, we completed an optimization of our Spanish portfolios debt facility, which helped us to right size the debt profile and better respond to fluctuations in the local power.

Mike Crawley: However, we will be selectively deploying our development capital in markets and technologies where we can leverage our competitive advantage, our experience, and our capabilities. Following our Outlook guidance that was published yesterday, Northland will be advancing onshore opportunities within Alberta, Ontario, and New York, and we will continue to develop offshore opportunities in Scotland and South Korea in relation to our existing early stage projects in those markets. Focus will mean that we will no longer pursue any new development work in Mexico or Colombia while we look to double down on our growth in a narrow set of markets. Northland remains disciplined by only pursuing projects that meet our investment criteria and create shareholder value.

Rice's following the change in the regulatory framework over the summer.

And finally, we completed and up financing of the absolute debt facility.

Financing is consistent with our investment thesis of annual up financings driven by the growth and strong performance of the business we.

We have hedges in place to protect the Canadian dollar denominated debt balance against changes in the Colombian peso and due to the appreciation of the peso over the last year. The proceeds of the finance up financing were used to settle our FX hedge and provide northland with a $44 million cash.

Distribution.

Moving on to our operating and financial results released last night for the fourth quarter and full year.

Financial performance was solid we met full year guidance of adjusted EBITDA and exceeded our guidance of adjusted free cash flow and free cash flow per share. This year as a result of the strong performance across our offshore wind portfolio and seldom gains realized over the year.

Mike Crawley: This means not being shy to exit opportunities that don't meet that objective. An example of this in 2023 was our strategic exit from the Nord Sea Cluster wind projects in Germany. Thank you.

We achieved full year adjusted EBITDA of $1 2 billion, representing a decrease of 11% compared to 2022, which was primarily attributed to lower contributions from the offshore wind portfolio due to the spike in market power prices realized in 2020.

Two.

A higher level of development and G&A administrative costs.

Mike Crawley: While these decisions are not easy, they demonstrate Northland's financial discipline and reflect our promise to shareholders. With a now 12 gigawatt development pipeline, we feel confident in our own growth ambitions. While having the flexibility to be selective and pivot pending on market conditions, it enables our asset recycling strategy, which we will speak to in greater detail at our investor. Overall, it was a very productive year for Northland, where we delivered our objectives and have set up a strong springboard for 2024. I would like to thank all of our employees and partners who have been an integral part of Northland's success. At this time, I would like to take this opportunity to separately thank Pauline Alam Chandani and David Pavel for their outstanding leadership during their dedicated years of service at Northland. They have both been a critical part of our leadership team for the last several years.

Decrease in the contribution from the Spanish portfolio, primarily due to lower power prices noted during our last earnings call and this decline was offset by gains from development asset sell downs executed during 2023.

As Mike noted Northland has been planning for sell Downs is part of our funding and partnership strategy for a few years. However, it was this past year, where we really sees the opportunity to close some important partnership transactions and also exit a project where the returns no longer met our economic requirements.

We will continue to review strategic partnership and asset recycling opportunities going forward as Mike said as well as maintaining a disciplined look on our growth projects that we pursue going forward.

With respect to our adjusted free cash flow and adjust.

Adjusted free cash flow and free cash flow Northland generated $498 million and $424 million and the year, respectively. This compares to $461 million and $380 million in the same period last year.

The factors contributing to this 8% increase in adjusted free cash flow were.

A decrease in scheduled debt repayments at our operating projects and in 2022 as a result of the higher power prices. We made some onetime principal repayments as part of our loan restructurings at Orange, Spain, and Gemini facilities.

A decrease in current taxes, primarily attributed to our on offshore wind in Spanish facilities, driving lower operating results in 2023 and gains from offshore wind development asset sell downs and.

Resulting resulting gains from FX hedge settlements.

These increases were partially offset by the decrease in the contribution from our operating facilities decreased due to higher net proceeds from the observer refinancing recognized in 2022.

Mike Crawley: Now as Northland embarks on the critical construction phase of its three major projects, this presents an opportunity to bring in new leaders that bring in fresh perspective, expertise, and vision to support our current focus on execution while also looking ahead to further growth down the road. With the ongoing comprehensive global search for a new CFO, considering internal and external candidates, we are fortunate to have Adam Beaumont lead us through this transition. Now, many of you know Adam quite well.

And net proceeds from the sale of two gas assets in April 2022.

On a per share basis. These figures translated into adjusted free cash flow of $1 97, and free cash flow of $1 68 in the year compared to adjusted free cash flow of $1 95, and free cash flow of $1 61 per share last year.

These results generated an adjusted free cash flow and free cash flow net payout ratios of 61% and 71% respectively calculated on a basis of cash dividends paid compared to 61% and 74% for the same period last year.

With respect to our balance sheet as of December 31, 2023, Northland had approximately $600 million of cash and liquidity comprising funds available from our revolving facility and corporate cash on hand.

Mike Crawley: He's been with Northland for over 13 years, where he's contributed to our remarkable evolution. His deep understanding of our business and culture has been instrumental in our journey. His experience combined with his strong relationship with Northland and across the financial industry positions him perfectly to lead us through this transition. We're also excited to have Toby Edmonds join us as the new Executive Vice President of the Offshore Wind Business Unit. Toby brings a wealth of offshore wind execution, operation, and joint venture management experience, which is the catalyst for our offshore wind business going forward. Prior to his most recent role as Chief Operating Officer of Maple Power, Toby spent more than ten years at RWE, the large majority of which he spent as a project director for two large offshore wind projects in the UK.

To reiterate our construction program is fully funded after the closing of the hi, along sell down to Jim Terry We continue to prudently manage our balance sheet and we'll continue to look for opportunities to bolster our corporate liquidity and enhance our cash flow.

Turning to our financial guidance for 2024.

We expect adjusted EBITDA to be in the range of one two to one 3 billion compared.

Compared to 124 billion in 2023.

The key offsetting factors include higher contributions from a full year of operations from our New York onshore wind projects as well as higher contributions due to the normalization of production for off and onshore other onshore renewable assets.

Lower development costs as a result of focusing on the execution of our construction projects.

Which is offset by the non recurrence of sell down gains in 2023 from our offshore wind assets.

For 2020 for free cash flow per share guidance, we expect to be in the range of $1 30 to $1 50 per share.

While for free cash flow, we expect to generate $1 10 to $1.30 per share.

When compared to 2023 results key factors contributing to the decrease in adjusted free cash flow and the free cash flow per share are.

Mike Crawley: Previous experience in both offshore wind project execution and executive leadership gives him the unique skillset to lead us through this new chapter of our offshore wind business. So with that, I will now turn the call over to Adam for a detailed review of our financial results. Thank you, Mike, and good morning, everyone. Before we dive into the specifics of the quarter and the year behind us, I would like to echo Mike's comments and share my thanks and appreciation for Pauline's leadership and support over the last four years. She had a huge impact on our organization, and we wish her well in her next event.

Lower sell down gains, which are not factored in to our guidance forecast lower settlement gains that were experienced in 2023.

Lower contribution from him so as a result of higher up financing proceeds in 2023.

Offset by higher contributions from a full year of operations at our New York onshore wind projects and the return to normalized production for the remainder of our renewable assets.

Additionally, free cash flow.

It will be approximately $60 million of <unk> as Mike said.

Compared to two <unk>.

Prior years the development costs.

Because we are focusing on the construction of our activities and how do you prioritize certain markets.

Explained our costs are lower.

Corporate G&A costs are expected to be $75 million in 2024, which would be a reasonable run rate to assume going forward.

Adam Beaumont: As Mike alluded to, it was a successful year and a strong quarter to close off 2020. In total, we executed approximately $15 billion of corporate and project funding. This included closing the Gentari partnership late in the year, where we used the proceeds from the transaction to repay our short-term bridge facility and will fund our remaining equity. Regenteri will now also contribute its share of the equity along with us until the first draw is met. In December, we completed three other financings, including... securing final tax equity for approximately $300 million for our two onshore wind projects in New York, Bluestone and Ball Hill. We completed an optimization of our Spanish portfolio's debt facility, which helped us to right-size the debt profile and better respond to fluctuations in the local power following the change in the regulatory framework. And finally, we completed an up-financing of the IBSA debt.

As previously noted our disclosed guidance ranges for adjusted EBITDA, adjusted free cash flow and free cash flow do not assume any sell down proceeds as such net sell down proceeds will be reported in our non <unk> measures only when they occur.

It would be noted our payout ratio will remain elevated by design largely reflecting the level of spending on growth initiatives and projects under construction until 2027, when they are expected to be fully operational.

This although a larger construction pipeline is a similar situation to what Northland successfully executed on our construction program of three European offshore wind projects approximately 10 years ago.

Once the projects under construction are fully completed they are expected to deliver on an annual basis $570 to $615 million of adjusted EBITDA.

$185 million to $210 million of adjusted free cash flow by 2027.

This will provide a meaningful cash flow amount for our business and with the 20 to 30 year revenue contracts will extend the.

Contracted cash flow profile.

For Northland.

In addition, I wanted to know the results released last night include an impairment.

Goodwill for our <unk> portfolio. The portfolio continues to have regulated returns and perform above our investment expectations. However, as a result of the higher cash flows received since its acquisition due to the higher power prices the regulated cash flows going forward over over the.

Adam Beaumont: The up-financing is consistent with our investment thesis of annual up-financings driven by growth... We have hedges in place to protect the Canadian dollar-denominated debt balance against changes in the Colombian peso. Due to the appreciation of the peso over the last year, the proceeds of the up-financing were used to settle our FX hedge and provide Northland with a $44 million cash due. Moving on to our Operating and Financial Results released last night for the fourth quarter and the fifth quarter, our financial performance was solid.

Life over the regulated life will be lower.

<unk> and higher discount rates diminish the fair value of the portfolio, which led to the impairment of goodwill.

To conclude it has been a solid quarter and a resilient year for Northland with Derisking completing financings for our construction projects. Several several several sell down transactions and streamlining and simplifying our growth focus we surpassed our guidance and are proud of our accomplishments, we achieved and continue to look for.

To deliver on our objectives for 2024, I will now turn the call back over to Mike for concluding remarks.

Adam Beaumont: We met full-year guidance of adjusted EBITDA and exceeded our guidance of adjusted free cash flow and free cash flow per share. This was a result of the strong performance across our offshore wind portfolio and sell-down gains realized. We achieved full-year adjusted EBITDA of $1.2 billion, representing a decrease of 11% compared to 2022, which was primarily attributed to lower contributions from the offshore wind portfolio due to the spike in market power prices realized, and a higher level of development in GNA administrative costs. There has been an increase in the contribution from the Spanish portfolio, primarily due to lower power prices noted during our last earnings call. And this decline was offset by gains from Development Asset Sell Declines.

Thank you Adam.

Say it one last time 2023 was a really busy year for Northland and we accomplished a lot and most importantly, most importantly, we were able to lock down and fund a large amount of growth, which is Adam laid out for you will deliver a significant amount of additional EBITDA and free cash flow by 2027, we have no.

Further requirements to tap equity or debt markets any additional growth would be purely purely discretionary and so 2024 is going to be a lot about executing on those projects and ensuring that they come in as I said earlier on time and on budget.

I know that our offshore wind project directors, Yens and Tim and the head of our onshore business unit Michelle are looking forward to telling you more about these projects at our Investor day on March 5th. So this concludes our prepared remarks, and we'd now be happy to take your questions. Please open the lines. Thank you as a reminder.

Adam Beaumont: As Mike noted, Northland has been planning for sell-downs as part of our funding and partnership strategy for a few years. However, it was this past year where we really seized the opportunity to close some important partnership transactions and also exit a project where the returns no longer met our economic goals. We will continue to review strategic partnership and asset recycling opportunities going forward, as Mike said, as well as maintaining a disciplined look at our growth projects that we pursue. With respect to our adjusted free cash flow and free-adjusted free cash flow and free cash- Northland generated 498 million dollars.

To ask a question you will need to press star one on your telephone to withdraw.

Your question. Please press Star one again, please wait for your name to be announced please standby, while we compile the Q&A roster.

Speaker Change: For your first question please.

Speaker Change: Our first question comes from the line of Sean Stewart with TD Securities. Your line is now open.

Sean Steuart: Thanks, Good morning, everyone.

Sean Steuart: Couple of questions, Mike, hoping you can give some visibility on opportunities to advance perspective.

Sean Steuart: Onshore developments to backfill the development pipeline and I gather that would be more of a 2025 and beyond.

Sean Stewart: Initiatives, but.

Sean Stewart: What you see is the.

Sean Stewart: The most transparent opportunities on that front and your comfort that.

Adam Beaumont: $424 million in the year. This compares to $461 million and $380 million in the same period last year. The factors contributing to this 8% increase in adjusted free cash flow were, A Decrease in Scheduled Debt Repayments at our Operating, and in 2022, as a result of the higher power. We made some one-time principal repayments as part of our loan restructuring.

Sean Stewart: Current and pro forma available liquidity will be adequate to act upon.

Sean Stewart: The equity investments for those opportunities.

Speaker Change: Yes, so I mean, you're right in saying that in terms of the Fid's are financial closes or NTP is on those projects that would be a 2025 storey latter half of 2025 and into 2026, but where we have presence right now is in Alberta.

Sean Stewart: <unk> no.

Sean Stewart: New York.

And I'll talk about span an attack, but those are the three main markets, where we have presence where we're looking to grow in both New York and Alberta, We've got a portfolio of early mid even later stage development projects.

Adam Beaumont: At our Spain and Gemini. A decrease in current taxes primarily attributed to our onshore wind and Spanish facilities driving lower operating results in 2023, and resulting gains from FX hedge settlement. These increases were partially offset by the decrease in the contribution from our operating facilities, decreased due to higher net proceeds from the EBSA refinancing recognized in 2022 and net proceeds from the sale of two gas assets in April. On a per-share basis, these figures translated into adjusted free cash flow of $1.97 and free cash flow of $1.68, compared to adjusted free cash flow of $1.95 and free cash flow of $1.61 per share last year These results generated an adjusted free cash flow and free cash flow net payout ratio of 61% and 71%, respectively, calculated on the basis of cash dividends paid, compared to 61% and 74% for the same period. Blast!

Sean Stewart: That we would be able to either secure corporate ppas for or bit into centralized auctions to secure revenue contracts as you know in Alberta.

Sean Stewart: The majority of our portfolio was unaffected by the moratorium, which.

Sean Stewart: The Alberta government has signaled its being lifted in any event, but.

Speaker Change: So we are.

Speaker Change: We have some flexibility about when we move forward with those solar projects in Alberta, and Theres also some battery storage projects that we think are interesting in that province to flipping to New York State.

Speaker Change: We have mostly of solar portfolio in that state that it that our team on the ground has been developing over the last few years, but we also have one wind project as well that we may move forward with in that state as well.

Speaker Change: And that state as you know Sean its annual nicer to options as a mechanism to secure revenue contracts there.

Speaker Change:

Speaker Change: We would be.

Speaker Change: As I said looking to not move forward with any new investments until later in 2025 2024 is really about.

Speaker Change: Executing on the projects that we have in front of us.

Speaker Change: And the there's been no decision or no view taken yet on how we would fund those projects, whether it's with partner.

Adam Beaumont: With respect to our balance sheet as of December 31st, 2023. Northland had approximately $600 million of cash and... We also have a variety of other funds available from our revolving facility and corporate cash flow. To reiterate, our construction program is fully funded after the closing of the Hia-Long. We continue to prudently manage our balance sheet and will continue to look for opportunities to bolster our corporate liquidity and enhance our cash flow. Turning to our financial guidance for 2024, we expect adjusted EBITDA to be in the range of $1.2 to $1.3 billion compared to $1.24 billion in 2023. Key offsetting factors include higher contributions from a full year of operations from our New York onshore wind projects, as well as higher contributions due to the normalization of production for our off and onshore renewable energy projects, lower development costs as a result of focusing on the execution of our construction projects, which is offset by the non-recurrence of sell-down gains in 2023 from our offshore wind. For 2024, free cash flow per share guidance, we expect to be in the range of $1.30 to $1.50 per share, while for free cash flow, we expect to generate $1.10 to $1.30 per share. When compared to 2023 results, key factors contributing to the decrease in adjusted free cash flow and free cash flow per share are

Speaker Change: Capital with our own organically generated funds or by some other means so we will give certainly in more detail.

Speaker Change: As 2024 progresses on that but that's kind of where we're at right now Spain, we've got.

Speaker Change: A significant operating fleet of 550 megawatts, mostly wind, which is good in that market.

Speaker Change: Versus solar at this point in time, and so we see opportunities for.

Speaker Change: Perhaps to add more generation capacity to some of those interconnects, but early days on that.

Speaker Change: And we would like to do more in Spain, but but the team still has to scope out what that opportunity could look like.

Speaker Change: Thanks for that detail Mike.

Speaker Change: And second question and maybe you don't want to say too much ahead of the Investor day, but you see thing development activity in a few markets that you noted including Colombia.

Speaker Change: Any comments on.

Speaker Change: I guess I guess plans for asset sales, whether it's <unk> or other assets.

Speaker Change: Presumably there is no urgency in weighing the decision to sell off assets versus valuation considerations. How do you think about that attention.

Speaker Change: Yes, so I think assets.

Speaker Change: For sure in terms of capital recycling we are.

Speaker Change: Always looking at a number of different opportunities.

Speaker Change: So just because we're looking at arc.

Speaker Change: At a particular opportunity doesn't necessarily mean, we're going to move on that right.

Speaker Change: And from our standpoint, particularly in the current market conditions. The Optionality is important so we want to make sure that we're.

Speaker Change: Have as many options available to us so that we don't end up.

Speaker Change: Feeling like we have to move on and an attractive opportunity, which we would not so we would only look at <unk>.

Speaker Change: Sell down or any divestment, if the economics were attractive to Northland.

Speaker Change: Okay. Thanks, very much for that detail I'll get back in the queue.

Speaker Change: Thanks, John.

Speaker Change: You.

Speaker Change: Our next question comes from the line of Nelson <unk> with RBC capital markets. Your line is now open.

Speaker Change: Great. Thanks, and good morning, everyone.

Adam Beaumont: Lower sell-down gains, which are not factored into our guidance forecast. Lower settlement. Lower contribution from IBSA as a result of higher up financing proceeds in 2023, offset by higher contributions from a full year of operations at our New York onshore wind projects and the return to normalized production for the remainder of our renewal. Additionally, free cash flow will be approximately $60 million of DevEx, as Mike... Compared to prior years, the development costs, because we are focusing on the construction of our activities and have geoprioritized certain markets, as Mike explained, our costs are high. Corporate G&A costs are expected to be $75 million in 2024. As previously noted, our disclosed guidance ranges for adjusted free cash flow and free cash flow.

Nelson: Quick question on I guess Youre more focused <unk>.

Nelson: Development targets, so you've stopped development activities in Mexico, Colombia, Japan.

Nelson: Are you taking any have you taken any charges or any impairments.

Nelson: Was any of that.

Nelson: So have you taken any in Q4 and or do you expect it takes them some charges going forward.

Nelson: No.

Speaker Change: Right out of yes, no we did take a charge last year.

Speaker Change: And sorry in 2023 related to the Columbia projects, but that was it.

That's right.

Speaker Change: Okay, Great and then just on asset sell downs.

Speaker Change: Is there anything you can say in.

Speaker Change: So I think youre looking at whether it's outright sell downs or.

Speaker Change: Selling down of a minority stake in <unk>.

Speaker Change: <unk> been pretty active last year.

Speaker Change: Is there anything you can say about.

Speaker Change: The potential transaction in Spain.

Speaker Change: No.

I mean other than what we said already is that we're always looking at different options.

Speaker Change: But nothing.

Speaker Change: To say beyond that.

Speaker Change: Okay got it and then just on your guidance for 2024.

Speaker Change: I guess other than.

Speaker Change: General changes in.

Speaker Change: Generation being above or below the long term average.

Speaker Change: In terms of what could.

Speaker Change: Push you above or below your guidance range.

Speaker Change: Would that mainly be.

Speaker Change: Essentially.

Speaker Change: Recognizing gains on.

Speaker Change: Sell downs or refinancings are and things like that like do you see any.

Speaker Change: Other.

Adam Beaumont: Do not assume any sell-downs. As such, not fell down proceed will be reported in our nine IFRS measures only when... It should be noted that our payout ratio will remain elevated by design, largely reflecting the level of spending on growth initiatives and projects under construction until 2027 when they are expected to be fully operational. This, although a larger construction pipeline, is a similar situation to when Northland successfully executed on our construction program of three European offshore wind projects approximately 10 years ago. Once the projects under construction are fully completed, they are expected to deliver on an annual basis $570 to $615 million of adjusted EBITDA.

Speaker Change: Or any factors that could really move.

Speaker Change: Results this year other than generation.

Speaker Change: No I think you hit it right on.

Speaker Change: It's no different than the past, obviously, we have the production variability.

Speaker Change: But those other two items as you alluded to we don't we don't guide to anything on the downside.

Speaker Change: So that that would be it.

Okay, and then just one last question.

Speaker Change: In New York, I guess, a nice sort of had their expedited process.

Speaker Change: Did you submit any wind or solar projects in to that bid last month.

Yes.

Speaker Change: Okay.

Speaker Change: So I guess, we will.

Speaker Change: In a few months weather.

Speaker Change: Whether you guys are successful.

Speaker Change: I'll leave it there thanks, everyone.

Speaker Change: Thank you.

Speaker Change: One moment for our next question please.

Speaker Change: Our next question comes from the line of Rupert <unk> with National Bank. Your line is now open.

Rupert: Hi, good morning, everyone.

Speaker Change: Rupert.

Rupert: So you potentially looking at some more sell downs and you highlighted do you want to maintain optionality.

Rupert: Does that include Optionality with respect to potential acquisitions are you active in the M&A market.

Rupert: Is there potential you could find something of interest which could be aligned with your with your strategy in the future.

Rupert: The.

Rupert: Certainly in the near term the answer would be no.

Rupert: In the longer term, depending on what we do with capital recycling.

Rupert: Use of proceeds.

Rupert: Coming out of that then there may be an opportunity to certainly there are.

Adam Beaumont: 185 to 210 million of adjusted free cash flow by 2020. This will provide a meaningful cash flow amount for our and with the 20- to 30-year revenue contracts, we'll extend the Contracted Cash Flow Profit. In addition, I wanted to note the results released last night include an impairment of goodwill for our Spanish partners. The portfolio continues to have regulated returns and perform above our investment expectations. However, as a result of the higher cash flows received since its acquisition due to the higher power prices, the regulated cash flows going forward over the regulated life will be lower. This, and higher discount rates, diminished the fair value of the portfolio, which led to the impairment.

Rupert: Some better opportunities in certain markets now than maybe it would have been two or three years ago. So.

Rupert: But that's how I'd leave it at that.

Speaker Change: Alright, and then secondly more of a.

Speaker Change: Question on your long term outlook, but if we look at the offshore.

Speaker Change: Assets that you have in <unk>.

Speaker Change: In the North Sea you do have one coming off contract of course, North Sea 2027 I believe.

Speaker Change: How are you seeing developments in the offtake market, there and what do you think will be the opportunity for refinancing.

Speaker Change: Tracking that asset how is that evolving.

Speaker Change: Well, it's been an active market. So you probably would have seen a number of.

Speaker Change: Off takes.

Speaker Change: Onshore and offshore projects.

Speaker Change: Now over the last couple of months or three months in Europe, Northern Europe in particular.

So we've kind of.

Speaker Change: Disclose that.

Speaker Change: We will begin working on.

Speaker Change: Securing an offtake for North Sea, one doesn't come off until 2027, but we wanted to get going I guess early on it and see what the what the market conditions are like and that's that's kind of where we're at right now but the.

Speaker Change: The other thing that we've done to Rupert is we've got a team that were forming internally.

Speaker Change: Start looking at all of our facilities.

Speaker Change: And becoming I guess more proactive in terms of both re contracting repowering, but also looking at optimization opportunities in all of them in the first.

Mike Crawley: To conclude, it has been a solid quarter and a resilient year for Northland, with de-risking, completing financings for our construction projects, several sell-down transactions, and streamlining and simplifying our growth. We surpassed our guidance and are proud of the accomplishments we achieved. We continue to look forward to delivering on our objectives for 2020. I will now turn the call back over to Mike for closing. Thank you, Adam. So to say it one last time, 2023 was a really busy year for Northland, and we accomplished a lot, and, most importantly, we were able to lock down and fund a large amount of growth, which, as Adam laid out for you, will deliver a significant amount of additional EBITDA and free cash flow by 2027. We have no further requirements to tap equity or debt markets.

Speaker Change:

Speaker Change: Opportunity.

Speaker Change: We would we want to go after in terms of growing free cash flow is how to get more.

Speaker Change: More out of our existing facilities.

Speaker Change: Alright, very good I'll leave it there and look forward to March 5th.

Speaker Change: Okay. Thank you.

Speaker Change: One moment for our next question please.

Speaker Change: Our next question comes from the line of Ben Pham with BMO. Your line is now open.

Speaker Change: Okay.

Ben Pham: Hi, Thanks, good morning.

Ben Pham: Maybe going back to your your payout.

Ben Pham: Ratio and the guidance for this year free cash flow.

Ben Pham: 100% I know you mentioned that.

Ben Pham: Commitment to the dividend.

Ben Pham: You can you comment since this is the first year of <unk>.

Ben Pham: This big build cycle I would.

Ben Pham: I think that the payout ratio will get more stressed.

Ben Pham: Over time is that true.

Ben Pham: And how high can the payout ratio get to.

Speaker Change: Yes, so I think.

Speaker Change: No different than when we did the offshore wind projects like it will be we will have elevated because we've deployed the equity into those investments and then the the projects will start to come online.

Speaker Change: And again, we'll give some more color at Investor day, but obviously there are events that are happening between now and when all three projects online in 2027.

Mike Crawley: Any additional growth would be purely discretionary, and so 2024 is going to be a lot about executing on those projects and ensuring that they come in, as I said earlier, on time and on budget. I know that our Offshore Wind Project Directors, Jens and Tim, and the Head of our Onshore Business Unit, Michel Chislett, are looking forward to telling you more about these projects at our Investor Day on March 5th. So this concludes our prepared remarks, and we'd now be happy to take your questions. Please open the lines. Thank you. As a reminder, to ask a question, you'll need to press star 1-1 on your telephone.

Speaker Change: For example in either coming online in 2025, so I would say like we're not going to guide.

Speaker Change: Beyond any further than we have at this point, but you can see the signals.

Speaker Change: Two two things improving once all three are operational by 2027.

Speaker Change: Okay.

Speaker Change: Got it and then maybe maybe related.

Speaker Change: Question, you're seeing one of your peers.

Speaker Change: The dividend.

Speaker Change: Or is there a dividend quite a bit in.

Speaker Change: All right.

Speaker Change: Highlighting a 30% to 50% payout that's similar to our peers.

Speaker Change: In your sector.

Speaker Change: I'm wondering.

Their thesis is there's a lot of growth in the payout ratio is ideal.

Speaker Change: Why why why is that so different than north manpower.

Speaker Change: Then just philosophy on capital allocation versus your current payout ratio.

Operator: To withdraw your question, please press star 1-1 again. Please wait for your name to be announced. Please stand by while we compile the Q&A roster. One moment for our first question. Our first question comes from the line of Sean Steuart with TD Securities. Your line is now open. Thanks. Good morning, everyone.

Speaker Change: Maybe I'll take a couple of words and turn it to Adam.

Adam: I mean, one of the differences is when we talked about are in the calls and what we did in 2023. So we in 2023 secured.

Adam: All of the capital for three significant projects that are going to deliver kind of roughly $600 million EBITDA $200 million incremental free cash flow in 2027.

Sean Steuart: A couple of questions. Mike, I hope you can give some visibility on opportunities to advance potential onshore developments to backfill the development pipeline. And I gather this would be more of a 2025 and beyond set of initiatives, but what you see is the most transparent opportunities on that front and your comfort with that.

Adam: <unk> gone out and secured those investments were well underway in terms of constructing those projects.

So that's kind of.

Adam: There's no additional capex to put into those that theres no additional capex to put into that it's already done and we're now I think we're executing on it and we will deliver.

Adam: The cash flow as described.

Adam: So that's number one and so it may be we may be at a different point in times of our in terms of our.

Adam: <unk> cycle.

Adam: Than some other peers.

Adam: I think it's positive for Northland.

Mike Crawley: Current and pro forma available liquidity will be adequate to fund the equity investments for those out there. You're right in saying that in terms of FIDs or financial closures or NTPs on those projects, it would be a 2025 story, the latter half of 2025 and into 2026. But where we have a presence right now is in Alberta, Ontario, New York, and I'll talk about Spain in a sec, but those are the three main markets where we have a presence and where we're looking to grow.

Adam: The Ah <unk>.

Adam: Second thing is with respect to kind of the.

Adam: Looking back at Gemini and North Sea one.

Adam: Those are two large projects certainly how long and Baltic are two very significant projects, but we're also a larger company than we were 10 years ago. So we're able to still <unk>.

Invest in growth as Adam said $60 million in development.

Adam: Make sure that the company will have additional.

Adam: Additional investment opportunities as those projects come online so that we can deliver.

Adam: Free cash flow growth further EBITDA growth.

Adam: After those three projects come online and so we really can put ourselves on a.

Adam: Really positive.

Adam: Growth trajectory going forward too so it's always balancing off between how much we put into <unk>.

Mike Crawley: In both New York and Alberta, we've got a portfolio of early, mid, and even later stage development projects that we would be able to either secure corporate PPAs for or bid into centralized auctions to secure revenue contracts. As you know, in Alberta, the majority of our portfolio was unaffected by the moratorium, which I think the Alberta government's signal is being lifted in any event. We have some flexibility about when we move forward with those solar projects in Alberta, and there are also some battery storage projects that we think are interesting in that province too. Flipping to New York State, we have mostly a solar portfolio in that state that our team on the ground has been developing over the last few years. We also have a one wind project as well that we may move forward with in that state. In that state, as you know, Sean, its annual NYSERDA auctions are a mechanism to secure revenue contracts there.

Adam: Versus.

Adam: Making sure we maintain a.

Adam: The payout ratio at a reasonable level and it will fluctuate up and down but.

Adam: But I think we're in a strong enough position.

Adam: Not to have to do what are I know, we're in a strong enough position us to do it with some of our peers have done.

Speaker Change: Yes, nothing to add from what makes sense.

Adam: Okay.

Adam: Thanks.

Speaker Change: Thank you.

Speaker Change: One moment for our next question please.

Speaker Change: Our next question comes from the line of Mark Jarvi with CIBC. Your line is now open.

Mark Jarvi: Thanks. Good morning, just wondering if you guys could clarify capital spent to date on high long and Baltic powering whether or not you are tracking to the numbers you outlined in the presentation in the fall I think it was what can you give a 28% of the capex at positive or 22% on high long.

Speaker Change: Yes, Mark so we can get we're going to give some more numbers.

Mark Jarvi: Part of our Investor day, but I would say that the numbers that we had out there are generally correct. There was some timing.

Mark Jarvi: Probably that will cause that to be slightly different but for the most part they're in line.

Mark Jarvi: And the timing was moving faster or slower.

Mark Jarvi: Uh huh.

Mark Jarvi: Different different circumstances for each project.

Mike Crawley: We would be looking to not move forward with any new investments until later in 2025. 2024 is really about executing on the projects that we have in front of us, and there's been no decision or no view taken yet on how we would fund those projects, whether it's with partner capital, with our own organically generated funds, or by some other means. We'll certainly give more detail as 2024 progresses on that, but that's kind of where we're at right now. Spain, we've got a significant operating fleet, about 550 megawatts, mostly wind, which is good in that market versus solar at this point in time.

Speaker Change: Okay anything since the last update in terms of the hiccups or challenges or anything else in terms of timelines or progress in terms of any of the onshore fabrication work today.

Speaker Change: No I mean overall as we said in the opening remarks the projects are all three.

Speaker Change: On schedule.

Speaker Change: And and trending on budget so.

Speaker Change: Overall, we're feeling good about the state that the projects are out right now.

Speaker Change: And of course the.

Speaker Change: Two project directors, and Michelle will give us a bit more detail on them on March 5th.

Speaker Change: Okay and then.

Speaker Change: Maybe update in terms of partnerships in South Korea is that something where you maybe you bring in an early stage partner is that something that happened in 2024.

Speaker Change: So what would a partner need to see before they would step in.

Mike Crawley: We see opportunities perhaps to add more generation capacity to some of those interconnects, but it's early days on that. We would like to do more in Spain, but the team still has to scope out what that opportunity is. Thanks for that detail, Mike. And second question, and maybe you don't want to say too much ahead of Investor Day, but you're stepping up development activity in a few markets that you noted, including Colombia. Any comments on that? I guess plans for asset sales, whether it's EBSA or other assets, and Presumably, there's no urgency and weighing the decision to sell off assets versus valuation considerations. How do you think about that tension?

Speaker Change: Officials or some of the <unk> work on those projects.

Speaker Change: Yeah, So I think.

Speaker Change: Theres different options for partners in the <unk> portfolio.

Speaker Change: T J kind of partner or a local partner or maybe both.

Speaker Change:

Speaker Change: I think they would want to understand.

Speaker Change: The relative competitiveness of the sites that we have.

Speaker Change: Obviously, the that includes kind of the cost to build of those sites and the.

Speaker Change: And of course construction risk is which is exactly how we look at those.

Speaker Change: Those projects as well as to understand that better.

Speaker Change: So the projects are still at a relatively early stage.

Speaker Change: So TBD TBD how that.

Speaker Change: Partnership discussions develop over 2020 for them.

Mike Crawley: For sure, in terms of capital recycling, we are always looking at a number of different opportunities. But just because we're looking at a particular opportunity doesn't necessarily mean we're going to move on it, right? And from our standpoint, particularly in the current market conditions, optionality is important. So we want to make sure that we have as many options available to us so that we don't end up moving on an unattractive opportunity which we would not. We would only look at sell-down or any divestment if the economics were attractive to Northland.

Speaker Change: But we'll obviously keep the.

Speaker Change: Keep the market informed if there's anything to announce.

Speaker Change: So it's around relative economics, Mike if you do sign a partnership.

Read that as a sort of external validation of the potential viability of those projects and the return potential.

Mike: Yeah, I think that that doesn't mean, that's exactly right there.

Mike: A significant portfolio of Soc.

Mike: Somebody to be a good partner for us we'd want to partner, who actually it's going to add value and they would.

Mike: The applying some pretty rigorous diligence to those those projects.

Speaker Change: Great. Okay. Thanks Harlan.

Speaker Change: Thank you one moment for our next question.

Speaker Change: Our next question comes from the line of Nick Wojciech with Carmax Cormack Securities. Your line is now open.

Mike Crawley: Okay, thanks very much for that detail. I'll get back to you. Thank you. Our next question comes from the line of Nelson Ng with RBC Capital Markets. Your line is now open.

Nick Wojciech: Thanks, Good morning, guys.

Nick Wojciech: Hi, long Theres reported that I saw last week that the 640 megawatt <unk> wind project.

Nick Wojciech: This first two turbines are removed after some seafloor pilot run issues I'm. Just wondering if you guys can comment that all the work you've done in the region.

Nelson Ng: Great, thanks and good morning everyone. Quick question on, I guess, your more focused development target. So, you've stopped development activities in Mexico, Colombia, Japan. Are you taking any, like, have you taken any charges or? www.northlandpower.com any of that?

Nick Wojciech: And why you have so much confidence.

Nick Wojciech: Again on this going off without a hitch development time might be met.

Nick Wojciech: Issues with Capex.

Speaker Change: The extra color there would be helpful.

Speaker Change: Those who are how long is in a different.

Speaker Change: Part of the Taiwan Strait.

Mike Crawley: So, have you taken any in Q4? Thank you. No. We did take a charge last year in 2023 related to the Columbia projects. Okay. And then just on asset selldowns. Is there anything you can...

Speaker Change: Seabed conditions number one number two.

Speaker Change: We have done.

Speaker Change: Long is one of the.

Speaker Change: One of the last not the last of those initial projects that were awarded in the Taiwan to go into construction UN Lynn I think was the first or at least one of the first to go. So there are several years in between.

Mike Crawley: So I think you're looking at whether it's outright sell-downs or... And you've been pretty active last year. Is there anything you can say about that? Thank you.

Speaker Change: Notice to proceed on an on high long versus Union.

Mike Crawley: I mean, other than what we said already, that we're always looking at different options. But nothing to say beyond that. Got it. And then just on your guidance for 2024, I guess other than general changes in a generation being above or below the long-term average.

Speaker Change: And that allowed us to do not just a lot more geo tech geofence in other words, the seabed mapping and bore holes then.

Speaker Change: The Union project. It we did more on high long than we did on any of our projects that we built in the North Sea.

So we've got a strong level of confidence in terms of.

Mike Crawley: In terms of what could push you above or below your guidance range, would that mainly be? sell downs or refinancings or, and things like that, like, do you see any other or any factors that could really move? No, Nelson, I think you hit it right on, different than in the past. Obviously, we have the production variability, but those other two items, as you alluded to, we don't guide to anything on the selldown side. So that, And then just one last question, in New York.

Speaker Change: The seabed conditions.

Speaker Change: And it is as I said in a different location of the Taiwan Strait.

Speaker Change: Also got a much longer construction period deliberately to make sure that.

Speaker Change: That will allow buffers in the schedule in the construction process is not rushed.

Speaker Change: Okay, that's great. Thanks.

Speaker Change: And then I'm not asking about more growth here with this one.

Speaker Change: Poland I'm curious we've spoken before I think it was at the last Investor day, but the value of having Orland and then you brought it up again today I am curious if having partnerships like that is leading to maybe more tangible and near term opportunities that you.

Mike Crawley: NYSERDA had their expedited process. Did you submit any wind or solar projects to that bid last? Yes. Okay. So I guess we'll be here in a few months, but they're, I'll leave it there. One moment for our next question. Our next question comes from the line of Rupert Merer with National Bank. Your line is now open. Rupert.

Speaker Change: You, maybe otherwise wouldn't have had an opportunity to look at I'm. Just curious if that's kind of becoming a new source of opportunities for you guys.

Speaker Change: I mean, we would like to think so I mean, we like to think that we're a good partner and I think we've.

Speaker Change: I've been very happy with the partnerships that we've had with Mitsui with Orland.

Speaker Change: And so we'd like to do more ESP has been a great partner in Scotland project. So we would like to do more with.

Speaker Change: With those partners and also seek out new partners that are similarly.

Rupert M. Merer: Thank you. Thank you. Thank you. Does that include optionality?

Mike Crawley: Are you active in the M&A? Rupert Merer, Sean Steuart, and Nelson Ng, Northland Power Inc. For more information, visit www.northlandpower.com. Certainly, in the near term, the answer would be no. In the longer term, depending on what we do with capital recycling, if there's a use of proceeds coming out of that, then there may be an opportunity, better opportunities in certain markets now than they maybe would have been. And then, secondly, more of a...

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Speaker Change: So, yes, we hope that that can lead to more.

Speaker Change: Okay. Okay.

Speaker Change: Thank you.

Speaker Change: I'm currently showing no further questions at this time I would like to hand, the conference back over to Mr. Mike Crawley for closing remarks.

Mike Crawley: Okay, well thank you.

Mike Crawley: To everybody for joining us today, we're going to hold our Investor day as I've said, a few times on March 5th.

Mike Crawley: And our next earnings call will follow the release of our first quarter 2024 results in May in the meantime, Thank you for your continued confidence and support.

Mike Crawley: But if we look at the, That's what you have. NRC. How are you seeing development? Well, it's been an active market, so you probably would have seen a number of offtakes, onshore, and offshore projects. So we kind of.

Speaker Change: This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful day.

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Mike Crawley: It was disclosed that we would begin working on securing an off-take for Nord C1. It doesn't come off until 2027, but we wanted to get going, I guess, early on it and see what the market conditions are like, and that's kind of where we're at. The other thing that we've done too, Rupert, is we have a team that we're reforming internally to start looking at all of our facilities and becoming, I guess, more proactive, both recontracting and repowering, but also looking at optimization opportunities in all of them. What we want to go after, in terms of growing free cash flow, is how to get more out of our existence. All right, very good. I'll leave it there.

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Ben Sam: Thank you. One moment for our next question, and the next question comes from the line of Ben Sam with BMO. Your line is now open.

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Ben Sam: Hi. Thanks. Good morning.

Mike Crawley: Maybe going back to your payout ratio and the guidance for this year, free cash flow, 100%, I know you mentioned it. Commitment to the Dividend. Can you comment, since this is the first year of this big build cycle, I would think that the payout ratio will get more stressed. Over time, is that true? And how high can a payout ratio get to?

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Ben Sam: Yeah, Ben, I think, you know, like, no different than when we did the offshore wind projects. It will be, you know, we will have elevated because we've deployed the equity into those investments and the projects will start to come online. And again, we'll give some more color at Investor Day, but obviously, there are events that are happening between now and when all three projects are online in 2027. Um, you know, for example, coming online in 2025, so I would say, you know, like, we're not going to guide it beyond any further than we have at this point, but you can see the improvement once all three are operational. Okay, got it. Maybe, maybe I'll bring it up later. Question, have you seen one of your peers cut the dividend?

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Ben Sam: for their dividend quite a bit, Highlighting a 30 to 50% payout and that's something that's similar to another pure and, in your sector. I'm wondering.

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Mike Crawley: Their thesis is that there's a lot of growth and the payout ratio is ideal. Why is that so different from Northland Power? That's just their philosophy on cop allocation versus your current payout ratio. Maybe I'll say a couple of words and turn it to Adam.

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Mike Crawley: One of the differences is what we talked about in the calls and what we did in 2023. We secured all of the capital for three significant projects that are going to deliver roughly $600 million EBITDA and $200 million incremental free cash flow in 2027. We've gone out and secured those investments, and we're well underway in terms of constructing those projects. There's no additional capex to put into that, it's already done, and we're executing on it, and we will deliver the cash flow as described. So that's number one, and maybe we may be at a different point in time in terms of our development cycle than some other peers, which I think is positive for Northland.

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Mike Crawley: The second thing is, with respect to kind of looking back at Gemini and North Sea One, those are two large projects, certainly Heilong and Baltic are two very significant projects, but we are also a larger company than we were 10 years ago, so we're able to still invest in growth, as Adam said, $60 million in development, to make sure that the company will have additional investment opportunities as those projects come online so that we can deliver further free cash flow growth, Thank you, we put ourselves on a really positive growth trajectory going forward too. So it's always balancing off between how much we put into DevEx versus making sure we maintain a payout ratio at a reasonable level, and it will fluctuate up and down, but I think we're in a strong enough position not to have to do what our, uh, I know we're in a, Thank you. I think that's what it's called. Okay, thank you very much.

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Ben Sam: Thank you. One moment for our next question, please. Our next question comes from the line of Mark Jarvie with CIBC. The line is now open. Thanks. Good morning, everyone.

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Mark Jarvie: Just wondering if you guys can clarify the capital spent to date on Heilong and Baltic Power and whether or not you're tracking the numbers you outlined in the presentation in the fall. I think it was looking to be about 28% of the capex at Baltic Power and 22% on Heilong. Yeah, Mark, so we can get we're going to give some more numbers as part of our investor day, but I would say that the numbers that we had out there are generally correct. There was some timing, probably that would cause that to be slightly different. But for the most part, they were, and the timing was either moving faster or slower, in different circumstances for each.

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Mike Crawley: Okay. Anything since the last update in terms of you picking up new challenges or anything else in terms of timelines or progress in terms of any of the onshore fabrication work to date? No, I mean, overall, as we said in the opening remarks, the projects are all free on schedule, uh... and uh... and trending on budget, so uh... overall, we're feeling good about the state that the projects are out right now. The two project directors and Michelle will give a bit more detail on that. OK, and then. With maybe the update in terms of partnerships in South Korea, is that something we're going to be bringing in early stage partners as something that could happen in 2024? And what would a partner need to see before they would step in to shoulder some of the DevEx work on those projects?

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Mike Crawley: I think there are different options for partners in the Korean portfolio, a strategic kind of partner or a local partner, maybe both. I think they would want to understand the relative competitiveness of the sites that we have. Obviously, that includes the cost to build of those sites and, of course, construction risks, exactly how we look at those projects as well to understand that better.

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Mike Crawley: The projects are still at a relatively early stage, so TBD and those partnership discussions will develop over 2024. We'll obviously keep the... So if it's around relative economics, Mike, if you do sign a partnership, should we do that as a sort of external validation of the potential viability of those projects and the return potential? I would, yeah, I think that's exactly right there, a significant portfolio. So, thank you. Thank you. To be a good partner for us, we'd want a partner who actually is going to add value, and they would be applying some pretty rigorous diligence to that. Great. Okay. See you on the test!

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Mike Crawley: Thanks, everyone. Thank you. One moment for our next question. Our next question comes from the line of Nick Boychuk with Cormark Securities. Your line is now open.

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Nick Boychuk: Thanks, good morning guys. In Heilong, there was a report that I saw last week that the 640 megawatt Yin Lin project needs to have its first two turbines removed after seafloor pile run issues. I'm just wondering if you guys can comment at all on the work that you've done in the region and why you have so much confidence again on this going off without a hitch, development timelines being met, no issues with CapEx, and any extra color there would be helpful. So our Heilong is in a different part of the Taiwan Strait, so different seabed conditions, number one. Number two, we have done – Heilong is one of the last, if not the last, of those initial projects that were awarded to Taiwan to go into construction. Yunlin, I think, was the first or at least one of the first to go.

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Mike Crawley: So there were several years between notice to proceed on Heilong versus Yunlin, and that allowed us to do not just a lot more geotech, geophys, in other words, seabed mapping and boreholes than the Yunlin project did, but we did more on Heilong than we did on any of our projects that we've built in the North Sea. So we've got a high level of confidence in terms of the seabed condition, and it is, as I said, in a different location in the Taiwan Strait.

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Mike Crawley: We've also got a much longer construction period deliberately to make sure that we allow buffers in the schedule and that the construction process is... Okay, that's great. Thanks. And then I'm not asking for more growth here with this one, Mike, but in Poland, I'm curious. We've spoken before, I think it was at the last Investor Day about the value of having Orlin, and then you brought it up again today. I'm curious if having partnerships like that is leading to maybe more tangible, near-term opportunities that you maybe otherwise wouldn't have had an opportunity to look at. I'm just curious if that's kind of becoming a new source of opportunities for you guys. We would like to think so.

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Mike Crawley: We like to think that we're a good partner. I think we've been very happy with the partnerships that we've had with Mitsui and with Orlin. We'd like to do more. ESB has been a great partner on the ScotWind project, so we would like to do more with those partners and also seek out new partners that are similarly, with similar strengths to bring. So yeah, we hope that that can lead

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Mike Crawley: OK. Thank you. I'm currently showing no further questions at this time.

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Mike Crawley: I would like to hand the conference back over to Mr. Mike Crawley for closing remarks. Thank you to everybody for joining us today. We're going to hold our Investor Day, as I've said a few times, on March 5th, and our next earnings call will follow the release of our first quarter 2024 results in May. In the meantime, thank you for your continued confidence and support. This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day. ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? www.northlandpowerinc.com ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??

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