Q4 2024 Innergex Renewable Energy Inc Earnings Call
Good morning, ladies and gentlemen, thank you for standing by welcome to Interjects renewable energies 'twenty 'twenty four fourth quarter and year end results conference call and webcast.
Speaker Change: Do you have you had a call, but I'll still be funny, yeah. Now what did you just don't see it as he starts gets empty nest Delinked Justice there may have been get Netflix and it was even flat.
At this time, all participants on the phone and Internet are in a listen only mode.
Speaker Change: During the presentation, we will conduct a question and answer session for analysts and institutional investors.
Speaker Change: Instructions will be provided at that time for you to queue up for questions. If anyone has any difficulties hearing the conference. Please press star followed by zero for operator assistance at any time I would like to remind everyone that this conference call is being recorded I will now turn the conference over to Nudge, you pay Dune director Investor Relations.
Speaker Change: Please go ahead.
Speaker Change: Hello, everyone and thank you for joining us today I'd like to specify that this conference will be held in English members of the media are invited to ask their questions by phone after this call.
Speaker Change: A presentation supporting today's discussion is available as we speak on the homepage of our website at Www Dot <unk> Dot com.
Speaker Change: This call contains forward looking statements within the meaning of applicable securities laws.
Speaker Change: Although the corporation believes that the expectations and assumptions on which forward looking statements are based are reasonable under the current circumstances listeners are cautioned not to rely unduly on these forward looking statements as no assurance can be given that it will prove to be correct.
Speaker Change: Forward looking information contained herein is made as of the date of this call and the corporation does not undertake any obligation to update or revise any forward looking information whether as a result of events or circumstances occurring after the date hereof, unless so required by law.
Speaker Change: During this call we will refer to financial measures that are not recognized according to international financial reporting standards. Please refer to the non <unk> measures section of the MD&A for more information.
Speaker Change: On today's call, we will discuss highlights for the quarter and the year.
Speaker Change: Provide an update on our growth and corporate initiatives review, our Q4 2024, and full year 2024 financial results and discuss our 2025 guidance and outlook. Our speakers will be Michel Letellier, President and Chief Executive Officer, and John <unk>, Chief Financial Officer, I will answer the conference over to Mr. Alitalia.
Speaker Change: Thank you so much.
Speaker Change: Angie and good morning, everybody very happy to be here with you and reporting on our objective of last year.
Speaker Change: Glad to report that we have met all our objectives and are actually exceed some of them.
Speaker Change: The team worked really are starting with financial results strong result.
Speaker Change: We basically hit the.
Speaker Change: The EBIT at target, we achieved $761 million of EBITDA.
Speaker Change: And we exceeded our upper end of our guidance on the free cash flow per share at one point or six so it was very strong result shows the resiliency of our portfolio.
Speaker Change: And also the great.
Speaker Change: Team the operations team that maintain.
Speaker Change: The assets availability over 96% uptime, so we cannot control the weather, but we can certainly control.
Speaker Change: The availability of our equipment in our operation team did a great job on that aspect.
Speaker Change: Following on our team construction team has done great work, we have delivered Boswell on time.
Speaker Change: Very very happy to have 330 megawatts of wind in Wyoming under long term PPA contract with 30 years to be now in operation full operation. So very happy on this advanced also at equal way is still on track to be in operation on the first.
Speaker Change: Quarter of 2025, so construction is advancing as we have planned and very happy to have now these.
Speaker Change: Great project Boswell being on in operation <unk> team has been very busy this year.
Speaker Change: Great Great results Super at the especially at the end of the year.
Speaker Change: Secured three project in BC again, 330 years, PPA index with CPI take or pay type of PPA, We love.
Speaker Change: Very happy to have come back in BC.
Speaker Change: RFP the opportunity there.
Speaker Change: <unk> has been in there.
Speaker Change: Waiting for a long time remember the last time, we participated in the BDC was in 2010 14 years ago Super happy to come back with a big win on on this opportunity also won 360 gigawatt of PPA in Chile earlier on this year.
Speaker Change: And we also had one three gigawatts of Prospected addition to the portfolio Super Super positive I think that it shows our resilience and our ability in our own market to be successful as well.
Speaker Change: Financing team has done a lot of work as well completed $450 million of project finance.
Speaker Change: That provides us a lot more flexibility in our balance sheet and also John is going to talk about it.
Speaker Change: We're going to meet the.
Speaker Change: TPI for Fitch ratings, so super.
Speaker Change: Constructive this year, we also have sales down $250 million worth of investment in Texas. As you know we have been able to get rid of the power hedge.
Speaker Change: A project with contracts in Texas, So very very happy on this outcome as well.
Speaker Change: If we switched on the other slide I think this is a very good testament on our ability.
Speaker Change: To win on our market in Canada, We always said that we wanted to maintain and expand our market shares in our core market in Canada. This slide I'm very very proud shows that we've been number one in winning RFP in Canada in the last couple of years out of all the players here so very.
Speaker Change: Very happy on our ability, but thanks to our.
Speaker Change: I would say.
Speaker Change: Busy.
Speaker Change: Business.
Speaker Change: Focus on being a partner with first nation, you know that this is enabling us to be able able and being a preferred partner with first nation. We've been doing this for a long time all our team are committed to be a good long term partner for our partners in the.
Speaker Change: And first one is just so I'd like to take.
Speaker Change: Takes the unfortunately need to take them to give us the opportunity to be a great partner.
Speaker Change: And this is shown in this result.
Speaker Change: All of these projects are in partnership with either first nation or community very very happy to have their support and being able to focus on future development as well, but I think that it's time now to take you a bit of a time to look at this slide and and too congrats ourselves on this.
Speaker Change: The big win in the last couple of years shows that we are a big leader in Canada, and we intend to defend our market share in our core market there.
Speaker Change: Next slide we're showing also in.
Speaker Change: Numbers.
Speaker Change: Starting the year in 2023 with $4 2000 megawatt new operation, we had including Boswell 370 megawatts in operation this year.
Speaker Change: Adding 9% of the total output so very happy to see that and also we have been super busy like we said in securing long term PPA and we love to have those again those are long term.
Speaker Change: Take or pay insulated PPA.
Speaker Change: We love and we had a lot of them in our pipeline.
Speaker Change: Pipeline of advanced project notwithstanding to.
Speaker Change: Bring a $6 2000 megawatts by the end of 2000, 32031 and still working on it.
Speaker Change: I think that this translate into showing that next year.
Speaker Change: We have 240 megawatt under construction this year.
Speaker Change: The biggest or the earliest project that we'll be seeing D. C. Woody will be <unk> as we mentioned we.
Speaker Change: We intend to put that project in service by the end of this quarter.
Speaker Change: And we have also a few more projects to be online by the end of 2026, including the mitigate Youtube soon number two project in.
Speaker Change: Quebec, So very strong focused on executing on those and we just mentioned that we're adding also on project with existing PPA.
Speaker Change: Onto the growth on the on the on the portfolio.
Speaker Change: These are adding 1.3.
Speaker Change: <unk> thousand 337 megawatt of growth visible growth with.
Speaker Change: Certainty in it.
Speaker Change: Having a long term.
Speaker Change: With these these these projects so that gives us $6 2000 megawatts of potential project by the end of 2000 32031 that can be accelerated a little bit with some BC project debt potentially.
Speaker Change: Have the opportunity to be in service a little bit earlier, we will talk about that later on.
Speaker Change: But super happy to show that we're growing with good quality of long term PPA in our portfolio.
Speaker Change: That being said I think that in order to be successful in our growth initiative. We have also to be built.
Speaker Change: Building on our <unk>.
Speaker Change: The ability and optionality on our prospective projects.
Speaker Change: <unk> heard us explaining a lot about the ability and the importance to have early stage development projects mid mid stage means that obviously, we're advancing these portfolio and advance that means that they are really.
Speaker Change: And are very close to obtain potential PPA. So this 10000 gigawatt of prospective project are the future.
Speaker Change: And it is providing us I would say opportunity.
Speaker Change: <unk>.
Speaker Change: Two bid RFP. So we're very selective also in our focus again youre seeing that we have more than two third of our opportunity in Canada, we see a lot of opportunity in Canada both in.
Speaker Change: Well I guess in all our market that we're focusing Quebec, Ontario.
Speaker Change: <unk>, Saskatchewan, Manitoba.
Speaker Change: Leader in.
Speaker Change: Essential PPA that we can win.
Speaker Change: We're seeing a lot of opportunity in Ontario, Ontario has an active RFP. So we're focusing on this obviously for 2025 and getting prepared also to build a diversified.
Speaker Change: Our portfolio in order to be flexible in answering future Rfps will talk about.
Speaker Change: The future of 2025 priority, it's a little bit later on.
Speaker Change: But I'll, let Sean three they'll explain and give you a little bit of more detail on our financial results.
Speaker Change: <unk> alright, Thank you Michelle and good morning, everyone. It's a real pleasure to discuss our results.
Speaker Change: We ended the year on a very strong note. So I'll start with production production in the quarter was 97% of LTA above the 94% achieved in Q4 2023 generation in Q4 was primarily driven by below average wind regimes in trends in Chile, lower water flows at our hydro sites outside of <unk>.
Speaker Change: <unk> and lower <unk> regions, and curtailment impacts in our Chilean solar portfolio. These elements were partly offset by above average generation at our BC hydro facilities and a strong contributions from our U S wind portfolio, including pre commissioning production at Boswell Springs.
Speaker Change: Production for the full year was at 93% of LTA in 2024 compared to 90% in the prior year overall, each of our hydro wind and solar portfolios recorded higher production year over year with various pockets of strength and weakness across specific regions.
Speaker Change: Our team has worked diligently to ensure optimal asset performance as evidenced by the 96% overall availability, we achieved in 2024 above our target of 95%.
Speaker Change: We remain focused on efficiently running our operations to ensure maximum availability and optimize what we can control.
Speaker Change: Finally.
Speaker Change: We're very pleased with the performance of our hydro portfolio in 2024, particularly in BC, where our hydro assets achieved a 104% of LTA.
Speaker Change: This clearly shows that the low generation experienced in 2023 with an anomaly and we are happy that we can demonstrate the full revenue generating capacity of these assets.
Speaker Change: We reported adjusted EBITDA proportionate of $210 million in Q4, 2024, and $761 million for the full year, approximately 13% and 3% higher year over year, respectively.
Speaker Change: Our Q4 results benefited from the strong performance of our hydro portfolio, especially in BC as well as the recognition of Ptc's generation generated from prior years in the U S. Following a change in the Recoverability estimates.
Speaker Change: However, even when adjusting for this onetime element that amounted to approximately $16 million our results would still be above expectations.
Speaker Change: Importantly, our results also benefited from the commissioning of Boswell Springs.
Speaker Change: If you recall this project was not part of our guidance for the year and we are proud of our construction teams diligent work, which allowed us to finish the project in 2024 and begin to benefit from it sooner than expected.
Speaker Change: This demonstrates our strong execution capabilities, which allows us to deliver value for shareholders.
Speaker Change: Free cash flow was $49 $2 million and approximately $214 million in Q4 and for the full year respectively.
Speaker Change: This equates to 24 cents for Q4, 2024 and $1 six per share for the full year.
Speaker Change: Free cash flow per share for the year was similar to the 2023 results with lower gains realized on strategic transactions offset by improved production new asset commissioning lower maintenance Capex and the previously noted onetime element in our <unk> and our Q4 results.
Speaker Change: In 2024, we delivered results that were above the midpoint of our EBITDA guidance and above the high end of the range for free cash flow per share.
Speaker Change: Even when adjusting for the gain realized on strategic transaction, our free cash flow per share in 2024 would have been 87 <unk>.
Speaker Change: Exceeding our guidance.
Speaker Change: We are pleased to have generated strong financial results to our shareholders in 2024, demonstrating our ability to deliver on our objectives. Despite weather related production shortfalls.
Speaker Change: Now as of the end of Q4, the total debt amounted to approximately $6 $6 billion and during the quarter. We continued to invest in our advanced development and under construction projects and completed approximately $450 million of financings to strengthen.
Speaker Change: Our balance sheet.
Speaker Change: Our liquidity.
Speaker Change: As improved and now stands at over $700 million.
Speaker Change: Supporting all our near term investments and financing needs.
Speaker Change: Following the commissioning of Boswell spring our remaining years two PPE maturity has increased to 13 years from 11, 6% previously.
Speaker Change: Meanwhile, our remaining years two debt maturity stands at 11 years following the recent refinancing.
Speaker Change: This is now below our remaining PPA maturity and well below the remaining useful life of our assets.
Speaker Change: Overall, we continue to prioritize our sulfur monetizing debt structure and remain comfortable with our leverage profile, which is approximately 90% nonrecourse.
Speaker Change: In 2024.
Speaker Change: We executed on several financing to strengthen our financial flexibility. This included a $250 million sell down of our Texas portfolio and approximately $450 million of financing initiatives of which 44% were related to our hydro portfolio of unique.
Speaker Change: Vintage that we continued to benefit from.
Speaker Change: The portfolio management activities completed in 2024 allowed us to effectively manage our cost of capital and remain committed to maintaining an investment grade balance sheet.
Speaker Change: Overall, we expect our portfolio to continue providing us with re contracting and refinancing optionality and we expect to execute on these opportunities in the coming years.
By further optimizing our capital structure and leverage our high quality fleet, we expect to remain self funded and create further value for our shareholders.
Speaker Change: Now.
Speaker Change: Looking out to 2025.
Speaker Change: Are once again, providing guidance for adjusted EBITDA proportionate and free cash flow per share.
Speaker Change: For the full year, we expect adjusted EBITDA proportionate to be in the range of 825 million to $875 million.
Speaker Change: This represents a $100 million increased compared to our 2020 for guidance.
Speaker Change: Approximately 13% growth compared to 2020 for guidance.
Speaker Change: We also expect free cash flow per share before prospective expenses to be in the range of 75 to <unk> 95 per share, which represents a 10% year over year increase at the midpoint compared to our 2020 guidance.
Speaker Change: Key assumptions behind our 2025 guidance include production expectations in line with our LTA.
Speaker Change: And asset availability of approximately 95%.
Speaker Change: The year over year growth, we expect to deliver in 'twenty 'twenty four and 'twenty 'twenty five is primarily driven by the commission of Boswell Springs as well as contributions from our recently completed battery energy storage project in Chile, and the upcoming addition of <unk>.
Speaker Change: Overall, we are happy with our teams worked to deliver significant growth for shoulder this year looks.
Speaker Change: Looking ahead, we remain focused on maintaining a disciplined approach to capital allocation, we continued to see significant opportunities to deploy capital at attractive risk adjusted returns in our core markets and our diversification strategy and risk management approach helps mitigate any.
Speaker Change: Or is it external risks that we may see in certain regions.
Speaker Change: So we thank you for your confidence.
Speaker Change: And we maintain our commitment to creating shareholder value and this estimate sustainable way.
Speaker Change: I'll now turn it back to Michele for an update on our 2025 corporate priorities.
Michele: <unk> remarks, thank you.
Michele: Again very happy to have also the ability to.
Michele: Give you those guidelines for 2025 as you just heard from John There is strong I think the assumption that we're using are conservative in some ways. So very very positive on our ability to.
Michele: To be able to deliver those guidance so in order to also enhance.
Michele: Our future.
Michele: <unk> future growth and development and efficiencies in the company, we want to make sure that construction in 2025 will be.
Michele: We will be successful and will be on time and on budget as we just spoke a little bit earlier, we have 240 megawatt of project that are under construction, we think that palomino 200 megawatt in Ohio in United States should also start construction in the next.
Michele: A few months we have finally.
Now the in our position.
Michele: The commitment to interconnect so super happy I think that this will enable us to probably be in service by mid year 2027 on that project still.
Michele: Still looking into finalizing an IND.
Michele: The uptake in this project we have multiple <unk>.
Michele: Prospect to finalize we now have the ability to be able to commit now that we have the interconnection.
Michele: Certainties, so super happy on this.
Michele: Development as you heard me, we wanted to focus a lot on our ability to sign long term PPA.
Michele: That's what we like.
Michele: We have the opportunity in Canada.
Michele: No for sure that Ontario will come up with an RFP.
Michele: We've seen that.
Michele: The final date will be somewhere in late September or early October to submit so we're getting ready there.
Michele: Rumor that BC hydro might also come up at the end of the year within RFP for 2025.
Michele: We are still waiting also for the confirmation of future RFP in Quebec, Theres rumor about Manitoba also coming up with an RFP and new Brunswick. So there is plenty of opportunity in in Canada, We intend to focus there you know that we have.
Michele: I think a good advantage in Canada, we're having a lot of.
Michele: People on the ground securing great opportunity for this these future RFP.
Michele: Our intention is to have a lot of.
Michele: Opportunity in a sense in our portfolio, we want to be selective also.
Michele: We told you that we wanted to have between 400 500 megawatt of new.
Michele: When in.
Michele: In 2025, we can sustain this with our self funding.
Michele: I guess the strategy. So we have a lot of opportunity we want to be selective we have opportunities in all our markets. So we will be focusing on Canada, but we.
Michele: We have great opportunity in France in the U S and in Chile.
Michele: So I think that through all these opportunity we will be selective and <unk> is to create value for our shareholders. So we want to make sure that.
Michele: These PPA that these RFP will be.
Michele: Bid in a return in mind, and making sure that we will be creating value for our shareholders.
Michele: Of course, we need to finance these construction activities and the project team has shown the ability in 2024 to be active on that side. So we have a few opportunity also to potentially recycle some of our.
Michele: Our hydro assets will be looking and being opportunistic in in these these opportunity to make sure that we keep our balance sheet being flexible.
Michele: If we go to the last slide just in key takeaways you you'll hear me talking a lot about our opportunity in growth I think there is a lot of noise in the United States.
Michele: Regarding renewable energy.
Michele: At <unk>, we believe that on the long run the United States, We will see some growth in renewable energy I think the basic.
Michele: Strong support for having a look more electricity being built in the U S is there.
Michele: The customer wants it so eventually I seeing that.
Michele: Renewable energy will prevail will be a great cheap option for the future customer in United States in the meantime, we're focusing of course.
Michele: One project that we think are.
Michele: Secure and could provide good value in the United States. So we are there for the long term, but we'll be cautious in many ways and make sure that the commitment we're going to get into our secure and makes sense for us to create value, but in the meantime, like we said we have a lot of opportunity.
Michele: In Canada, France is still a super active in Chile has also a lot of the RFP coming in the next in the next quarter or so.
Michele: We think also that the.
Michele: The customer wants the these.
Michele: These electricity.
Michele: Green.
Michele: Electrons in many area even in the United States, maybe the federal is not so keen these days, but a lot of states needs and wants to have green energy being built so we think that with all of that demand.
Michele: We have the ability to pass on good margin.
Michele: In our in our.
Michele: Bid. So this is <unk>.
Michele: <unk> main focus on our team we want to win but we want to win projects with good returns.
Michele: We will also leverage our expertise to navigate in any.
Michele: Any duties and stuff like that I think that.
Michele: Our business the base operation business is not affecting is not affected by these the noise around <unk> as you know we're not exporting into the U S. We're not importing power in the U S. So both bulk market are strong we have our base business.
Michele: It's protected.
Michele: And whatever is happening in the.
Michele: The supply chains being affected by <unk>, we have a lot of flexibility we have some.
Michele: Great team that we will look into diversifying our supply making sure that we are protected and we have the ability also.
Michele: To discuss the currency.
Michele: Exchange.
Michele: In dose contracts, so I think that.
Michele: Our team our focus we are aware and we have the ability to minimize any impact on our business. So on this we will open the <unk>.
Michele: Question period.
Michele: Thank you ladies and gentlemen, if you have a question. Please press the star followed by the one on you touched on phone.
Michele: Here at Tom acknowledging your request your questions, we'll be bold and the order. They are received please enter your lift the handset. If you are using a speaker phone before pressing any keys and your first question comes from.
Nick Chuck: Nick Chuck from Cormack. Please go ahead.
Nick Chuck: Thanks, Good morning, guys.
Michele: Yes.
Michele: Could you spend a second on the organic growth trajectory and how youre thinking about the risks geopolitically, but also with resource allocation people capital. It seems the opportunity you have in Canada is phenomenal magnitude 560 megawatts of BCE versus 13 megawatts in France. How are you thinking about allocating capital and time between these markets and would it not make more sense to.
Michele: Really just retrench, and Canada and focus on all of those opportunities there.
Michele: Well, we said that <unk> is.
Michele: Is it.
Michele: Is that the team in France has their focus.
Michele: Theyre getting Super independent we have a great team and trends that can do their own development and as long as they are creating value for us.
Michele: And they are delivering it as you as you are aware, we have a new partner.
Michele: With kids Agricola in France, they have there.
Michele: They have their own.
Michele: Objective and Theyre selling it so we're super happy with the team in France that doesn't mean that we're not focusing on Canada. We have now a higher more even people in Canada. We're focusing this is our own market.
Michele: We have the way I think we have shown our ability to win in Canada.
Michele: But again, thank you so much.
Michele: With our first nation partner and local community partner.
Michele: We have built.
Michele: Are these long term relationship for the last 20 years and this is not going to change I think that we have this culture of sharing and being great partner and this is going to be.
Michele: Obviously.
Michele: A big Big Big portion of our focused in in the next couple of years, but I agree with you we have great opportunity in Canada, and but that doesn't mean that we cannot have some.
Michele: Success in other market, we all hear about the noise in the U S. But again this is one of the biggest market.
Michele: Called there I think that the fundamental for renewable energy is there and.
Michele: We'll be we'll be prudent as <unk>.
Michele: Always but I think it would be silly not to put the seeds in.
Michele: In the ground to eventually collect great project in the future in the states.
Nick Chuck: Maybe to add Nick.
Nick Chuck: We've added just in the quarter alone 16 prospective projects to our pipeline with 9700 megawatt and 10 out of the sixteens are in Canada. So we are sort of not missing a beat in Canada. So just make sure we capture the opportunities.
Nick Chuck: The IPO.
Nick Chuck: Okay, that's good and it makes sense, but if we're thinking of the expertise that you have and you mentioned the phenomenal relationships you have with first nations partners.
Nick Chuck: Is it fair to assume that the returns on the capital deployed in Canada would exceed what you would be seen in France, the U S or Chile.
Nick Chuck: I think that France.
Nick Chuck: It's a very niche market it depends but I think that.
Nick Chuck: With risk reward I think defense is a good recipe.
Nick Chuck: Chile is always a little bit more risky than the rest of our market in South America. So we expect to have a small premium on our investment in Chile.
Nick Chuck: U S is.
Nick Chuck: Yes.
It's a wide wide market. There is pocket of project, where you can do great returns there is more competition, but we have to be selective.
Nick Chuck: But again I think that Canada risk reward I tend to agree. This is a great proposal proposal for us.
Speaker Change: Okay. Thanks, and then last for me just on the balance sheet can you comment quickly on the corporate lending facility you have the limit that you are comfortable taking that up to I believe the limit is $950 million, but you've got the convertible debenture that's coming due this spring how comfortable are you taking that.
Nick Chuck: <unk>.
Nick Chuck: Yes, so basically what we did in the fall really allowed us a lot of flexibility today. So when we look at and you saw maybe in wouldn't be published we actually re.
Nick Chuck: Repaid some debt that we had at the corporate level, the $150 million of debt and when we look at the June maturity for the converts.
Nick Chuck: Obviously actually it's not necessarily a good.
Nick Chuck: Idea to reissue converts even if the market is available, but we have this flexibility to actually repay the convert with the <unk> with the revolving credit facility and to actually time our outlook on this further down the road. So I think we're in a great position right now with this flexibility it allows us to not only continue.
Nick Chuck: Our development projects under development projects under construction.
Nick Chuck: But also allow us that flexibility for these shorter shorter maturities that we see in our balance sheet.
Speaker Change: Understood. Thank you John.
Speaker Change: And your next question comes from Nelson <unk> from RBC capital markets. Please go ahead.
Nelson: Great. Thank you and congrats on a pretty good year. So thanks for your question.
Speaker Change: Okay.
Speaker Change: So first question relates to the five projects under construction roughly what's the.
Speaker Change: Total capex.
Speaker Change: Spec for those five projects.
Speaker Change: It range.
Speaker Change: <unk>.
Speaker Change: Obviously, we need to finalize all the.
Speaker Change: I guess the contract negotiation, but it.
Speaker Change: It varies from anywhere from three to three.
Speaker Change: Five $3 6 million per megawatt.
Speaker Change: Yes.
Speaker Change: All of the pants here and there, but if you use anywhere between three and three six to three eight.
And the range for the window for that win as of yet.
Speaker Change: Okay got it.
Speaker Change: And then next question just relates to.
Speaker Change: U S tariffs and I think you have wins that will start construction produced sorry, <unk> two wind, yes. So so.
Speaker Change: Like are the turbines manufactured in Canada or the U S. Do you have to.
Speaker Change: Move.
Speaker Change: Do you have to buy a lot of equipment from the U S. And then the other thing is I think with that.
Speaker Change: Canadian dollars are a lot of.
Speaker Change: Items priced in U S dollars from from a Capex perspective.
Speaker Change: Yes.
Speaker Change: For assets that are built and have long term revenue in U S dollar debt.
Speaker Change: That by itself.
Speaker Change: It is hedged in itself and remember Palomino, we had bought all the panels. They are already in the state.
Speaker Change: We have some discussion with the finally position of the balance of plant.
Speaker Change: Supplier to have the racking and the.
Speaker Change: Some of the inverter might come from from Europe. So we're finalizing the the.
Speaker Change: The impact but.
Speaker Change: The team has come up with something around maybe maybe around $10 million of potential Judy impact remember that we have not signed the tpa just yet so all of these things are happening to everybody. So we've seen that there is an opportunity to flow through.
Speaker Change: This small increase again I think that comparing to the.
Speaker Change: Magnitude of the project and the advancement of our supply strategy on Palomino, we're very well protected.
Speaker Change: Four mitigate soon number two.
Speaker Change: The.
Speaker Change: Supplier.
Speaker Change: Not anything coming from the U S.
Speaker Change: There is some potential supply in Canada itself and from Asia.
Speaker Change: So far we don't see any impact on duty with the duty that we.
Speaker Change: We know for the time being.
Speaker Change: <unk>.
Speaker Change: We also have hedge early on 50% of the exchange rate. So whenever we have to pay in the next quarters.
Speaker Change: I'm, sorry are already protected with the exchange rate during the summertime so.
Speaker Change: I think we've been.
Speaker Change: Prudent in our approach and we feel that we're not exposed that much and in those two project.
Speaker Change: Great. Thanks, Michele and then just one more question in terms of.
Speaker Change: Your target for 2025.
Speaker Change: You mentioned that you are also looking to did you say so last year. You were you mentioned that you had bid over 500 megawatts in wind over 400 megawatts.
Speaker Change: Obviously, you've achieved that for <unk>.
Speaker Change: 2025.
Speaker Change: Our target to also bid over 500 megawatts.
Speaker Change: Yes, we'll have we'll have we will have more than 500 megawatt to bid.
Speaker Change: To win some around 400.
Speaker Change: But we will have we will have more than the two pit.
Speaker Change: Yeah.
Speaker Change: Got it okay I'll get back in the queue. Thank you.
Speaker Change: Okay.
And your next question comes from Rupert <unk> from National Bank. Please go ahead.
Rupert: Hi, good morning.
Speaker Change: Okay.
Speaker Change: I'd like to follow up on Palomino, So you've put a lot of thought to tariffs and potential changes to tax credits. So you've highlighted that you've you've invested in animals already how much have you invested in those panels and is your assumption. Then also that you have safe harbor on tax credits.
Speaker Change: They are all.
Speaker Change: Already.
Speaker Change: In a warehouse Rupert so and we have an agreement with.
Speaker Change: First of all are to have a proportional payment over the next quarter. So all of that is already in a warehouse in the United States.
So we and we also have safe Harbor.
Speaker Change: The ITC with.
Speaker Change: Possible.
While the transformer.
Speaker Change: And we have the confirmation that we will have the community as well.
Speaker Change: And in our books.
Speaker Change: The amounts project under development Palomino is amounting to about $19 million to date.
Speaker Change: December 30 <unk>.
Speaker Change: And that includes the value of all of the equipment that we've invested in so far.
Speaker Change: Yes, well some first payments were done that first initial payment and like I said, we have an agreement with first solar they have.
Speaker Change: Delivering these.
Speaker Change: Panel and a warehouse in United States.
Speaker Change: Okay great.
Speaker Change: And then secondly, so the share price I mean, arguably lowest we've seen.
Speaker Change: Florida, Interjects, you've talked about being able to self finance with sell downs in the future.
Speaker Change: But I'm just wondering if you can talk us through some of the other strategy.
Speaker Change: Plans you may have to deal with a low share price are you looking to allocate more capital for share buybacks, perhaps or look to.
Speaker Change: To do more or sell downs may be for share buybacks or other investments.
Speaker Change: How does the share price impact that youre thinking.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: That share back.
Speaker Change: Affecting my thinking as well, we're not happy with it of course.
Speaker Change: We certainly have some tools to buyback and we've done it in the past.
Speaker Change: We have to balance the need for future project and creating long term value with.
Speaker Change: The opportunity for US also to buy back shares so that's.
Rupert: That's part of our toolbox Rupert.
Speaker Change: Sure.
Speaker Change: We may.
Speaker Change: Possible to accelerate those those buyback, but we.
Speaker Change: We have to be careful on our balance sheet and our ability also to to fund the project, but youre right. There is also a possibility of selling down some of our some of our position in different project due to give us more flexibility opportunities.
Speaker Change: Yes.
How do you view your cost of capital today versus some of your competitors, maybe some of your private equity competitors who've been very successful in rfps, so far but do you feel the need to generate higher returns than some of your competitors going forward.
Speaker Change: Location remains.
Speaker Change: Well the important thing is as good return Rupert we we can certainly by volume.
Speaker Change: But that doesn't create a lot of value for our shareholders. So we think with our team and our great opportunity to position ourself.
Speaker Change: Great location.
Speaker Change: Location means good resource constraints, the ability and the ability to interconnect.
Speaker Change: I think that this is also part of the strat.
Speaker Change: Strategy to when cost of capital is one.
Speaker Change: Ingredient.
Speaker Change: The quality of the development and the quality of the site provide also.
Speaker Change: Sort of.
Speaker Change: Competitiveness on.
Speaker Change: On specific sites to create value and create good return, but yes, we feel that we have to create.
Speaker Change: More return.
Speaker Change: Total cost of capital in the industry has gone up and obviously.
Speaker Change: We've seen that.
Speaker Change: Hopefully the industry will be disciplined.
Speaker Change: And.
Speaker Change: We cannot.
Speaker Change: We cannot control our competitor, but we can certainly control, our bids and making sure that.
Speaker Change: We are disciplined in our approach.
Speaker Change: Great helpful. I'll leave it there thank you.
Speaker Change: Thank you.
Speaker Change: And your next question comes from Robert Hope from Scotia Bank. Please go ahead.
Speaker Change: Okay.
Robert Hope: Good morning, everyone.
Robert Hope: Maybe a first question on the 25 EBITDA guidance I appreciate you highlighting some of the buckets that will drive it higher including.
Robert Hope: New projects as well as higher generation, but could you maybe add a little bit more color kind of how much the lower generation to LTA did weigh on 2024 results as well as kind of the incremental contribution toward Boswell to get you to the.
Robert Hope: To the guidance range and I guess finally, the upper end at 875.
Robert Hope: What what.
Robert Hope: Signage of LTE would that assume.
Robert Hope: So the range assumes LTE at 100% so the major bucket.
Third driver is obviously the boswell commissioning so that in itself I think we guided you in the past, it's about 70 million U S of EBITDA, So let's call it a $100 million so that in itself.
Robert Hope: Helps us to guide you.
Robert Hope: Guide the street too.
Robert Hope: Our range is 100 million more of EBITDA.
Robert Hope: In 2024, there is a mix of events that occurred.
Robert Hope: But the lower generation was compensated.
Robert Hope: As we mentioned the recognition of PTC.
Robert Hope: But also the Boswell, obviously, the Boswell and.
Robert Hope: Boswell actually produced pre commissioning revenues.
Robert Hope: At a lower rate than the PPA rate, but it also did produce ptc's.
Robert Hope: And.
Robert Hope: The reason why it effects the free cash flow per share is that these <unk> are transferred.
Robert Hope: And Thats part of the investment from the tax equity partner that we just announced.
Robert Hope: A couple of days ago, So that is actually going to PT revenues and generation. Obviously, the bdcs are generated and to EBITDA and also to a free cash flow because it doesn't go against this investment from the tax equity rate.
Robert Hope: As it would as a scheduled payment if you want so it had a.
Robert Hope: And impact on our.
Robert Hope: Free cash flow generation, so that helps us actually beat the guidance, but even without that we would be the guidance anyway. So.
Robert Hope: I think we've controlled costs as well we allocate capital.
Robert Hope: Better and better rates. So we allocate you see that we have <unk> that improves but it's.
Robert Hope: We are trying to be as.
Robert Hope: Good as possible in our locations allocating the capital to the best development project.
Robert Hope: The most probable ones.
And so that also helps and we contain our G&A you can see that even through an inflationary period over the last couple years, we really contained our G&A and our operating costs.
Robert Hope: Opex and maintenance Capex, so that also helps.
Robert Hope: Drive better results.
Robert Hope: In the year.
Robert Hope: And we will continue to be very cost conscious and disciplined and also.
Robert Hope: We we.
Robert Hope: We take.
Robert Hope: 2025 production in line to take some assumption on curtailment as well.
Robert Hope: So that is built in our guidance for 2025.
Robert Hope: That's right.
Robert Hope: Alright, I appreciate that and then maybe just taking a look at your development portfolio of over 10 gig 23% of this in the U S.
Robert Hope: You seem pretty confident that palomino, we'll move forward here.
Robert Hope: And when you take a look at the rest of your U S development pipeline can you help us understand.
Robert Hope: How much do you think is the medium term as well as kind of a breakout between solar and wind.
Robert Hope: Well there is.
Robert Hope: There is another big.
Thomas: Achievement in 2024 that we haven't spoken but what Thomas which is in Washington State is a 400 megawatt.
Thomas: Solar that has just been confirmed with the state all the permit and what Homer even the.
Thomas: Potential referral to federal has been cleared for that project.
Thomas: Have also put ourselves in the Q4 interconnection so what Thomas.
Thomas: Could be ready for any RSP in the northwest.
Thomas: Area four utilities. So this is this is something that we're working in.
Thomas: And we think that.
Thomas: This is a potential good project that could be brought for.
Thomas: Participating in RFP in in United States.
Thomas: We also have bid some batteries I think that a lot of the utility are looking toward batteries. So we have.
Thomas: Secure and we're active in.
Thomas: Proposing.
Thomas: Proposing project.
Thomas: Or batteries.
Thomas: When we are building our portfolio in wind like I said.
Thomas: We've heard a lot of negative.
Thomas: Comment on on the on the wind from the administration, but again I think that if you look at the price of wind in the United States.
Thomas: It's compelling.
Thomas: <unk>, where you have users in factor in the $45, 46%, So I think that.
Thomas: Customer would be.
Thomas: <unk> advised not to be considered when in the future, but obviously.
Thomas: We're going to be prudent in developing the wind and the United States, but again our guidance for you guys is saying that we need 400 500 megawatt of project over all our market.
Thomas: And we've been telling you that we will be disciplined so.
Thomas: We don't need to be big winner in the United States in the next few years, because we have other opportunity, but I think that on the long run.
Thomas: It's a good investment to be present in the United States and position our sales and perhaps some players might walk away from from the U S and provide opportunity for us to secure good good project and access to the grid over time so for.
Thomas: Me.
Thomas: Of course, we're going to focus more on where we think we can control and be more competitive.
Thomas: But I would not discount the United States on the long run.
Speaker Change: Thank you.
Thomas: Okay.
Speaker Change: And your next question comes from Mark Jarvi from CIBC. Please go ahead.
Mark Jarvi: Hi, everyone.
Mark Jarvi: Obviously things are building a lot of momentum here in Canada, and your cost of deposits on the U S market can you refresh US again on what you think are realistic opportunities in terms of development objectives. I think last year around this time, you said one five gigawatts by 2030 are getting pretty close to that so.
Mark Jarvi: How do you think about that number now how do you think about.
Mark Jarvi: What else do you want to add in terms of your ability to continue to do that on a self funding basis.
Mark Jarvi: Like I said.
Mark Jarvi: We're focusing on 402 two.
Mark Jarvi: <unk> 500, but the most important thing is creating value and making sure that we can create port.
Mark Jarvi: Cash flow growth per share.
Mark Jarvi: If we if we hard to successful in creating.
Mark Jarvi: Maybe a funding.
Mark Jarvi: I would say opportunity.
Mark Jarvi: We have other other potential recycling that we have in our.
Mark Jarvi: Our ability we've shown.
Mark Jarvi: Over the years that we have a great team of M&A that 10 also.
Mark Jarvi: Put at work to sell down assets to refinance so refinance.
Mark Jarvi: So.
Mark Jarvi: I'm not so concerned about just volume I think again.
Mark Jarvi: We have opportunities to secure great project with good return and this is usually a good problem to have when you have to fund capital and at the end of the day. There is a lot of private equity that are looking for good good projects to invest in.
Mark Jarvi: So we're focusing on on creating good opportunities.
Mark Jarvi: Answering RFP, where we think we can create value and I don't think we can have enough of good long term PPA.
Mark Jarvi: With inflation.
Mark Jarvi: Built in them and take or pay.
Mark Jarvi: We've heard a lot about data center, and all that stuff, but the quality of the of the PPA in Canada with the main utility are really hard to beat.
Mark Jarvi: They're tasteful take or pay with.
Mark Jarvi: With inflation.
Mark Jarvi: This is kind of hard to.
Mark Jarvi: <unk>. So so if we can be successful in securing.
Mark Jarvi: Those with good local partner also I think that having the ability to be partner with local communities ensure long term social license in your project as well.
Mark Jarvi: So where would you say you stand now in terms of where you are in terms of.
Mark Jarvi: The size of the development in terms of what you can self fund today and then how close are you then to potentially having a ramp up minority sell downs or asset sales.
Mark Jarvi: To cover off incremental growth from here on forward.
Mark Jarvi: Well, we said that we can self fund about 400 megawatts and that's that's.
Mark Jarvi: Thats, what we aim obviously, if we if we add up all other project in 'twenty eight 'twenty nine which is unlikely I think that the opportunity will be more in 2030 31 $32. Two so further we go in the future.
Mark Jarvi: Greater ease our ability to self fund as well and also.
Mark Jarvi: As we put project and we're creating more cash flow per shares and our ability to raise.
Mark Jarvi: Corporate level debt he has increased as well so.
The whole idea of self funding includes also our ability to raise a little bit more more debt.
Speaker Change: And then another question just for me just Curtis Palmer near the end of that contract what's the expectations there.
Speaker Change: The view to maximize the PPA price or would you be looking to try to lock in a long term contract 10 years 20 years.
Speaker Change: Put some debt on that as a source of non dilutive funding sort of what's sort of optimization path for Curtis Palmer.
Speaker Change: This is.
Speaker Change: This is something that we're working on you're right on I mean, if we can secure a long term PPA with attractive pricing and that the ability to project finance that would be a great opportunity to recycle some more equity.
Speaker Change: I think that we are seeing stronger pricing.
Speaker Change: In the latest quarters.
Speaker Change: <unk>.
Speaker Change: E that.
Offshore wind is not necessarily going to be.
Speaker Change: Yes.
Speaker Change: Sure thing in the North East these days.
Speaker Change: That to some degree is increasing.
The pressure on the price in the North East, even if you want to bring new gas in that area, we all know that.
Speaker Change: Fairly constrained so I think that the existing project with.
Speaker Change: Good Green energy.
Speaker Change: Availability.
Speaker Change: Improve our potential output for better pricing for our long term commitment from from buyers.
Speaker Change: I'm just curious too if you can comment whether or not you sort of had the same vision between yourselves and your partner Hydro, Quebec in terms of how to optimize that asset and for some reason if there was a difference of opinion what would that be something you would be consider as a no.
Speaker Change: Non core asset to sell off your share of that facility.
Speaker Change: Always.
Speaker Change: We will send you some people that knows me.
Speaker Change: With.
Speaker Change: Joe that dime.
Not willing to sell.
Speaker Change: Obviously, we like to highlight <unk> in our portfolio, but at the end of the day, if it makes sense financially.
Speaker Change: <unk>.
Speaker Change: And it creates value for our shareholder and give more flexibility we would consider it.
Speaker Change: It's important to say that so far we have a good alignment with hydro Quebec on the management of this asset then and on the outlook for the for the future re contracting as well and our financing on this asset.
Speaker Change: Yes.
Speaker Change: Understood Alright, thanks for the time gentlemen, great update.
Speaker Change: Thank you.
Ladies and gentlemen, if there are any additional questions. At this time. Please press star followed by the one as a reminder, if you are using a speaker phone. Please lift the handset before pressing any keith.
Speaker Change: And we have a question from Ben Pham from BMO. Please go ahead.
Speaker Change: <unk> morning.
Ben Pham: Hey, good morning, I just wanted to check.
Speaker Change: Check on some of the self funding.
Speaker Change: Calculations.
Speaker Change: And just how it compared to.
Speaker Change: Last year, you're framing it as $300 million Capex once again megawatts that in.
Speaker Change: I just wanted to square that language to us.
Speaker Change: Language, which I'm not saying, it's new but maybe just an update for handbags I'm, assuming that's a gross number.
Speaker Change: And Dd's have higher free cash flow now with Boswell Springs.
Speaker Change: Question.
Speaker Change: Sure. It is a gross number when we talk about 400. It includes obviously the cash flows that are non generated by Boswell.
Benoit: Was that your question Benoit.
Speaker Change: Yeah, how does how does the math compare now to last year, because you mentioned youre generating free cash flow of $75 million elaborate.
Benoit: That can self fund 300 million Capex.
It is more like 150 megawatts is that.
Benoit: Some of the assumptions change or.
Benoit: Maybe I missed that.
Speaker Change: Bill there.
Speaker Change: No no not really I think we are going according to plan or putting in service all of our assets and the cash flow generated obviously has accounted for when we think about our capacity to move to.
Speaker Change: To build a 400 megawatt growth of assets, obviously, when we plan.
Speaker Change: We today don't have recycling activities in this so we could add recycling activities if need be.
Speaker Change: Our or refinancing of certain assets as we discussed so that could add to this capacity.
Speaker Change: And then it depends right every megawatt is not exactly the same.
Speaker Change: Megawatt is not the same cost or capex or capital structure out of the wind asset.
Speaker Change: The approximation is still good still valid.
Speaker Change: Okay, and then maybe related to that so I was just looking at your backlog.
Speaker Change: Post 2027 looks like every year there is.
Speaker Change: Youre welcome megawatts of projects, each year, which looks pretty good.
Speaker Change: Are you trying to sell.
Speaker Change: More of that White space program megawatts that.
Speaker Change: The Grand plan like EG acquired bags.
Speaker Change: And just kind of what Jess sickly.
Ben Pham: Sorry, Ben.
Speaker Change: Thank you.
Speaker Change: Could you repeat the question.
Sure.
Speaker Change: Oh, yes, absolutely I mean I'm just looking at your at your 27 plus backlog on slide nine.
Speaker Change: And each each year you have a lead.
Speaker Change: 200 megawatts of projects already yes, maybe not secured but looks like it's coming in each year.
Speaker Change: What is your plan then the Grand plan.
Speaker Change: You're trying to have each year 400 Max.
And so each year is that.
Speaker Change: Yes, Okay, that's probably at a minimum and like I said that fulfill our ability.
Speaker Change: To sell fund and it depends also on how.
Speaker Change: Yes.
Speaker Change: Aggressive or opportunistic we could be in recycling some of these assets.
Speaker Change: Even if we answer called today as you all know these days it takes four five years at least you put in service there is permitting but there is also the backlog in the interconnection. So even if hydro Quebec comes this year for Anr RFP is probably be in $31 32 to 33. So we are at.
Speaker Change: Actually wanting to.
Speaker Change: Protect our growth past 2030, there's maybe opportunity here and there to to bid 'twenty eight 'twenty nine.
Speaker Change: Most of the project will be now 31, if we have some some good news on BC you may have heard that BC hydro is trying with the BC government to accelerate.
Speaker Change: The interconnection date on the new win Rfps and they are working on reducing the burden on permitting and are asking <unk> to look into opportunities to accelerate the interconnection work.
If some of those project.
Speaker Change: Comes a little bit earlier that freed up some of the 2031 <unk> thousand 32 slot.
Speaker Change: So the idea for us is making sure that.
Speaker Change: We're building a long term.
Speaker Change: Our portfolio of backlog of good projects with good financial.
Speaker Change: Incentive for us to develop them and.
Speaker Change: And maybe then also the other thing.
Speaker Change: In the meantime, there is opportunities to build battery systems that might be a bit faster and as you saw so and I know, it's rather small but in France, we were able to.
Speaker Change: Get our hands on a very nice asset.
Speaker Change: We brought two construction very rapidly.
Speaker Change: So thats still generates.
Speaker Change: Our and I'll review appropriate returns to shareholders, considering the risk profile and it advances our places some assets in service before that.
Speaker Change: <unk> thousand 902030, as Michel mentioned, so so there is ways for us to advance some megawatts a bit faster.
Speaker Change: Chile is a good example, actually for that for that matter.
Speaker Change: Would you characterize the sequence of <unk>.
Speaker Change: What's coming on.
Speaker Change: Slide 27.
Speaker Change: Does it seem like Thats almost.
Speaker Change: Probably one of the best situations, you've seen for a long time.
Speaker Change: On a global front.
Speaker Change: And again the news are even better that there is.
Theres greater point and that's why we're seeing we don't understand the market we have those great opportunity.
Speaker Change: And great opportunity with.
Good quality the PPA.
Speaker Change: And we're focusing we have a lot of opportunities so that gives us the opportunity to be more selective and making sure that the project that we win are creating value for everybody.
Speaker Change: And the supply demand right now is on is favoring ipp's like <unk> right. So we've seen this the.
Speaker Change: The demand is there and the number of bids is much lower and as a metric like bid two awards that we've seen in the past. So we have I think an ability to flow through better returns better PPA pricing and we've demonstrated we've done this we've bid like pricing that was.
Speaker Change: A bit less aggressive and with more return and we did win and were awarded.
Speaker Change: Like we've rarely seen in the past right. So I think it's still going to be therefore, a number of years.
Speaker Change: Sure.
Speaker Change: Okay. Thank you very much.
Speaker Change: Thank you you're welcome.
Barry: Mr. Barry There are no further questions at this time you May proceed.
Speaker Change: Thank you for joining us today and for your interest in <unk>, we look forward to updating you on our progress again next quarter. Thank you. Thank you. Thank you all.
Barry: Yes.
Barry: Ladies and gentlemen, you may now disconnect your lines.
Barry: Okay.