Q3 2025 Northland Power Inc Earnings Call

On Thursday November 13th 2025 at 10, a M eastern.

Conducting this call for Northland power are Christine Healy precedent and C E O.

Jeff Hart, Chief Financial Officer, and Adam Beaumont, Senior Vice President of capital markets.

Sean Stewart: Okay. Understood. I'll get back in the queue. Thanks very much.

Before we begin Northland <unk> 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 looking statements that include assumptions and are subject to various risks.

Jeff Hart: Thank you.

Operator: Thank you. Our next question comes from Robert Hope of Scotiabank. Your line is open.

Baltaj Tudu: Morning, everyone. Can you add a little bit more color on the, thanks. Can you add a little bit more color on the specific issue driving the delayed pre-completion revenue on the onshore substation, when you expect it to be rectified, and if you have any recourse through insurance or warranty with the manufacturer on both the cost and lost revenues?

Actual results may differ materially from management's expected or forecasted results.

Please read the forward looking statements section in yesterday's news release announcing Northland Power's results and be guided by its contents, when making investment decisions or recommendations. The release is available at www Dot Northland power Dot Com I will now turn the call over to me.

Christine Healy: Sure. Thanks very much for the question. I love the technical and detailed questions. Basically, with the onshore substation, when we were installing some cabling, we were doing normal course testing, and we were dissatisfied with some of what we were seeing. We were dissatisfied with the results of some of the tests. When we investigated further, we saw that there was a bushing that we felt could create problems for us over the long term. It was functioning effectively, but it created a risk for long-term reliability. We, in fact, insisted that that get changed out. The supplier for that component is a subcontractor to one of our suppliers, and we do not have a direct contractual relationship with them, but we have been working with them to make sure we are satisfied with the replacement.

Ms Christine Healy.

Okay.

Good morning, everyone. Thank you for joining us today.

I will begin with our business update and then Jeff will provide more details on the financial results.

Just a quick note that with our 2025 Investor day coming up next week.

Today's remarks will focus on Q3 results and details behind the change to the dividend, we will share more detail on strategy and growth priorities on November 20th and we hope to see you there.

After our prepared remarks, we'll open the line for questions.

So I'll start with health and safety because as always safety remains a core value and top priority at Northland.

Christine Healy: In order to do that replacement work, we have to shut down the onshore substation for 20 days-ish, I think. I can't remember the exact number, so don't quote me on that. We have to turn off the onshore substation in order to complete that. Then we can be assured that the solution is there for the long haul. I think it's the right thing to do. The question of insurance and the rest, I think that it would be more a question for our supplier because this is part of what our supplier has to deliver for us.

This quarter Northland and our partners at the Oneida Battery storage project received in Ontario, Electrical Safety award recognizing the projects safety practices with nearly 300000 worker hours and zero lost time incidents Oneida has set a new standard for field safety on large scale builds we're very proud of that and Jordan.

My visit decide I saw firsthand the team's strong commitment to safety and performance.

The executive team and I are looking forward to sharing our new strategy at Investor Day next week, we'll be presenting a plan that capitalizes on the growing demand for power globally, and particularly in our core markets of Canada and Europe and this is driven by electrification energy security data Center.

Baltaj Tudu: All right, I appreciate that. Maybe just one more follow-up question there. Just given the long lead times on some equipment items, when would you expect the 20-day outage to occur? Just given it's onshore, I guess you don't have to wait for any weather windows, and that can be done at any time?

And de Carbonization trends.

This demand for power, particularly in our core markets offers a number of organic opportunities and value enhancement opportunities within our existing fleet.

Northland strong capability as a global power operator across multiple solutions allows the company to execute on this strategy.

Christine Healy: Yep. No weather windows, that's going to be done before the end of the year. We already have all of the components. We have those in our little hands at our warehouse as we speak.

I will add that as part of our new strategy, we have been assessing growth opportunities in our core markets and we have line of sight to multiple value accretive opportunities, where northland capabilities can be deployed to deliver long term value for shareholders.

Baltaj Tudu: Okay. Is the impact then just in 2025 then?

Christine Healy: There are two things going on at Hai Long. We have this issue at the onshore substation. The commissioning of the turbines that both Jeff and I referred to is an issue that is continuing into 2026. In fact, we see the financial results of that in 2026 instead of in 2025. Basically, this is a situation, again, managed within the perimeter of our supplier for the turbines. They have an obligation to deliver turbines to us that have been installed and commissioned. In fact, they've passed a reliability test, and they've been running for a number of days before we accept them in the handover. The planning for that commissioning was based on typical North Sea performance, which would be they would typically commission two to three a week.

To provide greater financial flexibility for self funded growth and maintain an investment grade balance sheet. The board of directors, including me has decided to adjust Northland as dividend to <unk> 72 per share on an annual basis.

We are committed to this sustainable dividend and it remains an important component of our long term value proposition.

So I'm going to pause here because as you know from my previous comments and from my history changing the dividend is not something I wanted to do in my career I have always resisted this and I can tell you that I have resisted it here at Northland too, but my goal and our goal at Northland as all.

Always to deliver best value for shareholders and after much analysis and assessment I'm convinced that this is the best way to do that.

Christine Healy: I think in the Taiwan Strait, the weather conditions have been more challenging, and it has been slower than anticipated. Our supplier has, I think, a robust plan in order to improve on that. Right now, we are in the poor weather time. They will be delivering on that in 2026, and hopefully, they will be able to start delivering the commissioning pace that we expect to see. Right now, we've seen disappointing performance on the commissioning, and they are not where they were meant to be at this point in time. Again, it's fully within their contract, so it doesn't have an impact for us on the budget. We have enough float still in the schedule that it does still fit within our schedule, but it does affect on pre-completion revenues.

Since arriving at Northland I've had hundreds of meetings with investors partners suppliers governments and competitors I brought Jeff in I tasked them with analyzing where we are with our current assets in our pipeline and he and the teams have done a great job to give us a clear picture of whats happening with.

So I'm going to pause here because as you know, from my previous comments and from my history changing, the dividend is not something I wanted to do in my career. I have always resisted this and I can tell you that I have resisted it here at Northline 2.

We've also completed our strategy deep dive and our planning cycle now for 2026 to 2030.

But my goal and our goal at Northland is always to deliver best value for shareholders and after much analysis and assessment. I'm convinced that this is the best way to do that.

I also stood up this task for us and we've been screening hundreds of opportunities large and small in Europe and in Canada, and they have found several value accretive opportunities and youre going to be hearing more about these in the coming weeks or months.

Christine Healy: Pre-completion revenues were part of our funding model for the project, and we're still working through that.

These opportunities are better than any we've seen in the last five years and indicate to me that having the flexibility to move on those opportunities is important.

In and I tasked him with analyzing where we are with our current assets and our Pipeline. And he and the teams have done a great job to give us a clear picture of what's Happening.

Baltaj Tudu: Thank you.

Operator: Thank you. Our next question comes from Nelson Ng of RBC Capital Markets. Your line is open.

we've also completed our strategy, deep dive, and our planning cycle now for 2026 to 2030

And so I contrast that against the backdrop that we've seen in 2025, which I would refer to as a year of volatility we saw historically low wins in the north sea in more than the front half of the year.

Baltaj Tudu: Great. Thanks. I had a quick follow-up question on the Hai Long commissioning of the turbines. I think you mentioned that Christine mentioned over half of the turbines are now installed, and I believe you stopped installing turbines early October or late September. How many of the installed turbines are currently commissioned?

I also stood up this task force and we've been screening, hundreds of opportunities, large and small in Europe, and in Canada, and they have found several value accretive opportunities and you're going to be hearing more about these in the coming weeks and months.

We saw a dramatic shift in sentiment in the United States related to renewables, we've seen a softening of corporate PPA activity in Europe, and we see in many of our core markets, increasing divergent divergence in electricity pricing forecast.

These opportunities are better than any we've seen in The Last 5 Years, and indicate to me that having the flexibility to move on those opportunities is important.

In parallel we have two very large projects in construction and while they remain on track and our teams are delivering and the words of Robert Frost there are miles to go before we sleep.

Christine Healy: Thanks for the question, Nelson. You know what? Fully commissioned right now, the challenge that we're having is that they have to do what we call a soak test. They have to run continually over a period of time with no alarms. Quite a few of them have started the test, and then alarms go off. This is, again, a difference with the weather impact because in the North Sea, if you have those alarms, it's pretty quick. You can go out, you can check it, you can remedy it. Typically, it's not anything wrong with the turbine. It's often something wrong with the sensor. That gets calibrated, that gets fixed. It's a really quick turnaround. Right now, because the weather conditions have been very tough, getting out to check those alarms has been quite difficult.

And so I contrast that against the backdrop that we've seen in 2025, which I would refer to as a year of volatility. We saw historically low winds in the North Sea in more than the first half of the year.

So when I'm looking ahead at how are we going to deliver best value to shareholders over the five and 10 year horizon.

We established some financial guardrails.

We will maintain an investment grade balance sheet, we will provide flexibility to deploy on value accretive growth that is self funding without reliance on equity markets and we will maintain a sustainable dividend.

We saw a dramatic shift in sentiment in the United States related to Renewables. We've seen a softening of corporate PPA activity in Europe, and we see in many of our core markets. Uh, increasing Divergence in a Divergence in electricity pricing forecasts.

In parallel, we have 2 very large projects in construction and while they remain on track and our teams are delivering in the words of Robert Frost there are miles to go before we sleep.

All of which is achieved with this change.

We believe this recalibration brings the payout ratio to a level that is prudent for a capital intensive growth company.

So when I'm looking ahead at how we are going to deliver the best value to shareholders over the 5- and 10-year horizon?

This plan does not rely on external common equity and it enables us to fund the project pipeline that will generate highly attractive risk adjusted returns.

Christine Healy: In terms of maybe the better answer, we have 14 of them that have been commissioned, but they've continued to have alarms. In terms of energized, right now, we have only two that are energized. Energized is probably, for me, the most important one. Those are the ones that are generating revenues. Right now, we have two that are energized and producing revenues.

And I will reiterate that the dividend remains an important component of Northland capital allocation framework.

We established some Financial guard rails. We will maintain an investment grade balance sheet. We will provide flexibility to deploy on value accretive growth. That is self-funding without Reliance on Equity markets and we will maintain a sustainable dividend.

Turning to our third quarter results. They were strong our global operations performed again to a high availability over 95% and the stronger wind in September led results to surpass last year in the same quarter that good wind has carried into October which we were happy to see.

All of which is achieved with this change.

We believe this recalibration brings the payout ratio to a level that is prudent for a capital intensive Growth Company.

Baltaj Tudu: Okay. Thirty-something installed, four commissioned, but two feeding power to the grid. Is that the right way of thinking about it?

This plan does not rely on external common equity and it enables us to fund a project pipeline that will generate, highly attractive risk-adjusted returns.

Turning to our projects in construction at high long are one one gigawatt offshore wind project in Taiwan over half of the wind turbines have now been installed.

Christine Healy: We have 14 that are commissioned, but they're under warranty as well. Just because they're commissioned doesn't mean that the supplier is off the hook with them. Right now, of the 14 commissioned, two of them are energized and functioning the way that we expect them to.

And I will reiterate that the dividend remains an important component of North month's Capital, allocation framework.

As you will note from the press release, though pre completion revenues have been lower than expected due to a longer commissioning times four installed wind turbines and certain technical components of the onshore substation needing to be replaced we expect this to be resolved and it will enable us to remain on track.

Turning to our third quarter results, they were strong, our Global operations performed again, to a high availability over, 95% and the stronger. Wind in September, LED results to surpass last year and the same quarter.

Baltaj Tudu: Okay. Over half of the turbines are installed, so that's like 30-something turbines installed.

That good wind has carried into October which we were happy to see.

Turning to our projects in construction.

Christine Healy: Yes. 37.

Baltaj Tudu: Seven.

Christine Healy: Thirty-seven turbines installed. The installation went very well. I would say this is a learning for our supplier about commissioning activities. They have a good recovery plan. I just want to be clear about that. They have a very strong recovery plan. They've got their A team on this. They will do a good job of this, but we probably won't see a huge amount of progress until the weather window opens up again in the new year.

And so the overall message is that the project remains on track for full commercial operations in 2027.

At high long. Our 1.1 gigawatt offshore wind project in Taiwan over half of the wind turbines. Have now been installed?

In Poland, our one one gigawatt Baltic power project installed both offshore substations each weighing over 2500 tons and located about 20 kilometers offshore. These substations will collect energy from our 76 turbines and transfer it to the onshore grid.

As you will note from the press release, though. Pre-completion revenues have been lower than expected due to longer commissioning times for installed, wind turbines and certain technical components of the onshore substation needing to be replaced. We expect this to be resolved and it will enable us to remain on track

Project also remains on track with full commercial operations expected in the back half of 2026.

Baltaj Tudu: Okay. I know in the past, you talked about the winter. Obviously, the weather isn't great, but you have the option to work during the winter, right? Is that supplier pretty much like if they see a window of opportunity during the winter, they would go and try to commission more or energize more projects? Is that what you're referring to in terms of the plan to?

And so, the overall message is that the project remains on track for full commercial operations in 2027.

Turning to development and growth, we continue to advance and refine our development pipeline pursuing opportunities in our core markets of Canada, and Europe that meet our investment criteria and deliver shareholder value.

In Canada, we see opportunities across all our generation and storage technologies, leveraging our small our strong domestic platform and brand.

In Poland, our 1.1 gigawatt Baltic power project installed both offshore substations, each weighing over 2500 tons, and located about 20, kilometres offshore. These substations will collect energy from our 76 turbines and transfer it to the onshore grid.

Christine Healy: Yes, they have a team in country, and they are available to go when the weather window opens. Whether it's open for a day or 10 days, they can do that in short bursts of time. The reality is that the weather has been pretty harsh the last couple of weeks, and there's only been one day in the last, I think, I want to say maybe as much as three weeks now, but there's only been one day that they've been able to get out there.

In Europe, we're evaluating several renewable power and battery storage projects, where we can apply our project execution and operational expertise.

That project also remains on track with full commercial operations, expected in the back half of 2026.

In Scotland. The one four gigawatt floating foundation project Huberty has been prioritized as part of our disciplined capital approach at.

Turning to development and growth, we continue to advance and refine our development pipelines pursuing opportunities in our core markets of Canada and Europe that meet our investment criteria and deliver shareholder value.

At the same time, our 900 megawatt fixed bottom offshore wind projects Spirit Nomura has completed community consultation and is progressing toward consensus submission with the government.

Baltaj Tudu: Okay. Just overall, I think in terms of the guidance, you guys talked about how the pre-completion revenues might be CAD 150 to 200 million lower than expected next year. Can you just talk about what the new assumption is? I think in the financing plan, roughly there was an estimate of, I think, roughly CAD 1 billion of pre-completion revenues.

In Canada, we see opportunities across all our generation and storage Technologies leveraging. Our small, our strong domestic platform and brand.

Global demand for reliable affordable sustainable power continues to rise and Northland is well positioned to capitalize on this trend.

In Europe, we're evaluating several Renewable Power and battery storage projects where we can apply our project execution and operational expertise.

I also reiterate that we have access to a growing number of opportunities, including what we call value enhancement projects that offer short cycle opportunities to deliver higher returns from our existing fleet.

In Scotland, the 1.4 gigawatt floating Foundation project. He has been deprioritized as part of our disciplined Capital approach.

Jeff Hart: Yeah. That's right, Nelson, right? Where we're at is you're right. It's a billion CAD at 100%. The reason we're talking about the impact into 2026 is any PCRs we would generate this year would actually be collected in the cash generated next year, in conjunction with effectively Q1 and Q2 PCRs as well. That's why we're talking about the 2026. The 150 to 200 is our share, and that's 31%. You can kind of back into the range there on a gross basis.

We see organic growth opportunities within our own pipeline and opportunities for acquisition of projects in mid to late stage on attractive terms.

At the same time, our 900 megawatt fixed bottom offshore. Wind project Spirit. Numera has completed Community consultation, and is progressing toward consent submission with the government.

So with that I'm going to turn it over to Jeff for a detailed update on our financial results, Jeff Alright, Thanks, Christine and good morning, everyone.

Global demand for Reliable affordable, sustainable, power continues to rise. And Northland is well positioned to capitalize on this trend.

I'll take some time to discuss our third quarter results, which were positively impacted by strong wind resource in September.

And as Christine mentioned earlier, our strong availability of over 95% allowed us to capture much of the benefit.

We call value enhancement projects that offer short-cycle opportunities to deliver higher returns from our existing fleet.

Quarter also benefited from the Oneida battery facility operations commencing in May.

Baltaj Tudu: Okay. I guess less than half of so the.

<unk> was partially all of that performance was partially offset by planned grid outage at <unk> and lower solar and wind resources at our operations in Spain.

Jeff Hart: Yeah, you're anywhere from half to 60% impact, give or take, on the current expectation. As Christine said, obviously, the supplier weather windows and to see how we could potentially close the gap, and other alternatives, right? That's effectively the good way to think about it.

We see organic growth opportunities within our own pipeline and opportunities for acquisition of projects in mid to late stage on attractive terms. So with that, I'm going to turn it over to Jeff for a detailed update on our financial results. Jeff. All right, thanks Christine and good morning everyone.

<unk> generated adjusted EBITDA of $257 million, a 13% increase compared to the same quarter of 2024, which was mainly a result of higher production at our three offshore wind assets.

I'll take some time to discuss our third quarter results, which were positively impacted by strong wind resources in September.

And as Christine mentioned earlier, our strong availability of over 95% allowed us to capture much of the benefit.

Baltaj Tudu: As a result, there will just be a larger draw on the non-recourse debt, or?

In an outage last year of Gemini.

And the additional contributions from one item, which came on earlier this year.

Jeff Hart: Well, we're evaluating what we could do. Number one is the recovery plan, and then looking at what we can do on the project side of it as well. Obviously, we've got the financial capability to manage it as well. We're looking at all the different avenues there and monitoring the technical situation. We'll obviously keep everyone abreast as that's updated.

During the third quarter, we generated free cash flow of $45 million, which was approximately 130% higher than the same quarter last year.

The quarter also benefited from the Onida battery facility operations commencing in May performance was partially on that performance was partially offset by planned grid outage at debu and lower solar and wind resource at our operations in Spain.

On a per share basis free cash flow in the third quarter of this year was 17.

Compared to <unk> in the third quarter of 2004.

The increase to free cash flow was primarily related to the higher adjusted EBITDA that I mentioned earlier.

Northland generated adjusted ibida of 257 million at 13% increase compared to the same quarter of 2024, which was mainly a result of higher production at our 3 offshore wind assets.

And an outage last year at Gemini.

Baltaj Tudu: Okay. Switching gears a bit, in terms of the dividend, the decision in terms of the sizing of the dividend cut, is the main target to internally fund all equity requirements going forward for the next five years? Is that how the dividend was sized?

And the net loss for the quarter was $456 million compared to a net loss of $191 million in 'twenty four.

And the additional contributions from Onida which came on earlier this year.

This was primarily due to a $527 million noncash impairment that was recognized for the North Sea one offshore wind facilities, resulting from the transition from the initial subsidy pricing regime to market pricing by May 2027.

During the third quarter, we generated free cash flow of 45 million which was approximately 130% higher than the same quarter last year.

And on a per-share basis, free cash flow in the third quarter of this year was $0.17 compared to $0.08 in the third quarter of 2024.

We have also updated our long term production forecast and anticipate an increase in operating and maintenance costs.

The increase in free cash flow was primarily related to the higher adjusted IBA that I mentioned earlier.

Jeff Hart: Yeah. It's Jeff here. Absolutely. I think our view, and I think I've reiterated this, is I believe in self-funding model. I think it's an effective way to execute the plan and creates what we view as solid accretion and shareholder value. That is the intent, is self-funded plan, and that's what we intend on delivering.

Turning to our investment program at the high long and Baltic power projects.

And the net loss for the quarter was 456 million compared to a net loss of 191 million in 24.

As of the end of the third quarter of 2025, we have spent approximately $12 billion state with remaining expected gross capital expenditures for the two projects to be $5 billion.

At high long, we've started to see the first revenues post first power, although lower than we expected as kristie mentioned.

And this is primarily due to a 527 million non-cash impairment. That was recognized for the Nord C1 offshore Wind Facility, resulting from the transition from the initial subsidy pricing regime to market pricing by May 2027

Baltaj Tudu: Great. Thanks, Jeff. I'll leave it there.

Impacting the pre completion revenues by approximately $150 million to $200 million.

We have also updated our long-term production, forecasts and anticipate an increase in operating and maintenance costs.

Operator: Thank you. Our next question comes from Mark Jarvey of CIBC. Your line is open.

Northland sure.

Overall, the project is continuing on track and on budget.

Turning to our investment program at the high long and Baltic power projects.

At Baltic power, we continue to advance the first power in 2006 when grid connection as planned.

Sean Stewart: Thanks. Jeff, you talked about maybe compensation on the pre-completions, contingencies in the project funding. How would you handicap the likelihood that Northland would have to put some incremental capital into Hai Long at this point?

Our financial guidance for 25 is unchanged with adjusted EBITDA expected to be in the range of one two to $1 3 billion and free cash flow is projected to between <unk> between $1 15, and $1 35 per share.

As of the end of the third quarter of 2025 we've spent approximately 12 billion dollars to date with remaining expected gross Capital expenditures for the 2 projects to be 5 billion dollars.

Jeff Hart: Look, I'm not going to get into hypotheticals and percentages. What I will say is I will always make sure, as a CFO, you need to make sure that you've got the liquidity, capital resources, and the funding strategy to manage contingencies like this. We have the capability to manage it corporately. We'll continue to progress it. I always have to manage on the view that I need and have to have the liquidity to manage it. We're looking at avenues within, number one, on the technical recovery plan, and number two, on other things we can do at the project level. I'm not going to give percentages on that right now. I have to make sure we've got the resources to handle it.

At high long, we've started to see the first revenues post first Power, although lower than we expected. As Christine mentioned impacting, the pre-completion revenues by approximately 150, to 200 million Northland share

Now turning to the balance sheet and updated capital allocation plan.

Overall, the project is continuing on track and on budget.

As Christine mentioned the announcement of the decision to recalibrate the dividend was not easy but provides the company a sustainable financial framework and provides funds to make accretive investments, which are underpinned by the cash flows of our business and an investment grade balance sheet.

At Baltic power, we continue to advance the first Power in 26 when grid connection is planned.

Our plan is expected to be self funded with no reliance on common equity issuances.

I'll be happy to share further details with you and lay out laid out at Investor Day next week I will hand, it back to Christine to conclude the call.

Our financial guidance for 25 is on changed with adjusted. Eva expected to be in the range of 1.2 to 1.3 billion and free cash flows, projected to between the day between between 1.15 and a $135 cents per share.

Now, turning to the balance sheet and updated, Capital allocation plan.

Thank you Jeff I'm also looking forward to our Investor Day next week, and we will then be providing deeper insight into our focus areas. The progress, we're making across the business and our growth plans that concludes our prepared remarks, so I'll turn the call over to the operator operator. Please open the line for questions. Thank you as a reminder to ask.

Christine Healy: Well, I'll just add to that, Mark, that this is back to the whole idea of we have to be prudent. These are large projects, and they're being delivered very, very well. We stand head and shoulders above many others who are delivering similar projects. There are bumps in the road in every project I've ever been involved in in my career. That's why we have to be ready to adjust to that when they come.

As Christine mentioned, the announcement of the decision to recalibrate. The dividend was not easy.

But provides the company, a sustainable Financial framework and provides funds to make a creative Investments which are underpinned by the cash flows of our business and an investment grade balance sheet.

Our plan is expected to be self-funded with no Reliance on common equity issuances.

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

On, I'll be happy to share further details with you and lay out, lay it out at investor day. Next week, I'll hand it back to Christine to conclude the call.

Jeff Hart: Maybe I'll word it this way: from my perspective, we'll look to mitigate and manage impacts, and look at the best alternative. I also have to make sure that I can manage it as if there is an injection required.

Yeah.

And our first question comes from Baltacha do of National Bank of Canada. Your line is open.

Sean Stewart: Got it. This as a component of the dividend cut would be sort of a minor element? Is it kind of the messaging?

Hey, good morning, and thank you for taking my question here.

Could you shed some color on the magnitude of the impairment at North Sea one and.

Jeff Hart: Yeah. I mean, I'll go back to what Christine and I have reiterated is this. Number one, it's rebalancing, I think, the payout to a capital-intensive industry. We also see lots of opportunity, both organic and inorganic, in the markets we're focusing on. It's really to capture that opportunity, rebalance to, I'd say, a sustainable financial framework that allows us to capture those opportunities. Ultimately, with that, it's the virtuous circle. It gives you a balance, protection, and resources to handle contingencies as well.

What are the factors that led to the Recalibration of the write down was prior market expertise and the market prices elevated and how are the conversations are evolving with respect to re contracting opportunities.

Thank you, Jeff. I'm also looking forward to our investor day next week and we will then be providing deeper insight into our Focus areas. The progress, we're making across the business and our growth plans that concludes our prepared remarks. So I'll turn the call over to the Operator. Operator, please open the line for questions. Thank you as a reminder to ask a question. Please press star 1, 1 on your telephone and wait for your name to be announced to withdraw your question. Please, press star 1 1, again please, stand by while we compile the Q&A roster.

Yes, no thanks, and it's in it's Jeff here, Yes, the impairment was primarily related to two the the pricing that we've gone out and I'll remind you was stepping down from the initial contract period from 194 euros per megawatt hour and ultimately theres, a phased step down to a 154 megawatt euro.

And our first question comes from beige to do of National Bank of Canada. Your line is open.

Sean Stewart: Just going back in terms of the timing announcement, we can debate about when it should happen. It sounds like you're trying to position this that you have a use of capital for new growth that's showing up on short-cycle projects and other opportunities. Any consideration was put into whether or not you should have announced this concurrent with new investments? How close are you on things like those short-cycle needs or potentially acquiring advanced-stage projects?

Per megawatt hour and then ultimately we go to market pricing in 2027 now we've been out in the market on the Ppas and I would expect something in the weeks and actually days were fairly close and.

Hey, good morning and thank you for taking my, my question here. Um, could you send some color on the magnitude of the impairment at North Z1 and uh, 1 of the factors that led to the recalibration of the right down was Prior Market expectations, the market prices elevated and how our conversations uh, evolving with respect to uh recontracting opportunities

And so we've really with those benchmarking as Christine alluded to in the script.

PPA markets and so we triangulated, all I'll say broadly I'd say into a market pricing in it around the ppas of of 60 to 70 euros per megawatt hour and so really it's a reflection of that step down and this is the only asset we have in the five years in the offshore that stepping down.

Christine Healy: Well, Mark, we had a lot of debate about that. I can tell you there's no right time because I can honestly say that if we waited to investor day, I would have expected somebody would have asked me the question then of, why didn't you tell us this a week ago when you had your quarter close? I think we're being transparent, there's never a good time for this. We decided to disclose the decision when the decision was made, and the decision was literally just made. We want to make sure that we're transparent about that. I think you should not be surprised to hear some new announcements in coming days.

And then just as a follow up and then just depreciating.

The lots from them that you made on the five years for the assets that are stepping down when we're looking at Deutsche booked which is still re contracted out until I believe the only 2030 years.

Are there similar assumptions that were made prior given the pricing dynamic.

Dynamic and curtailments.

Were evident as well.

No I think you alluded to curtailments in the German market and I think on a year to date, we've probably seen a seven 5% negative price curtailment.

And ultimately there's a phase step down to 154 megawatt, uh, Euros per megawatt hour. And then ultimately, we go to market pricing in in 2027. Now, we've been out in the market, uh, on the ppas. And I would expect something in the weeks and actually days, uh, we're fairly close. Uh, and so we really with those benchmarking is Christine alluded to in in the script. Uh, you know, the PPA markets. And so, we've triangulated all I'll say, broadly, I'd say into a market price in in in and around the ppas of of 60 to 70 uh, Euros per megawatt hour and and so really it's the reflection of that step down and and this is the only asset we have in the 5 years in the offshore that's stepping down.

Sean Stewart: Okay. Last one, just Jeff. In terms of the IG rating, is there a view that you'll use a little bit more on-balance sheet debt going forward versus how much non-recourse debt you used? Is that sort of factored into the decision on the dividend level?

I think our long term assumptions arent really far off of that plus or minus a half to two 1% on it.

We've really focused on on where we have contract renewals coming here in the first five years.

Jeff Hart: No. Look, I think obviously we'll get more color on it at investor day here and on details on overall funding. I would still expect the majority of our, I'll say, leverage or debt funding to be in the project finance realm. Clearly, the corporate balance sheet's an option for different opportunities, but that balance won't materially change. Just to reiterate the point, the execution, the opportunity in front of us go forward, and setting up the guardrails and framework that we're sustainable through cycles.

And that's where we look at the PPA market isn't really I'd say a longer term market it would be more into the five year frame and that's really what's setting it and impacting in one.

Okay, and then, um, just as a follow up that, and and then just appreciating, um, the last comment that you made on, on the 5 years, uh, for the assets that are stepping down when we're looking at Deutsche booked, which is still wreck contracts without until I believe, the only 2030s, um, are there similar assumptions that were made prior, uh, given the pricing dilemma Dynamic and, and curtailment, uh, that that are evident as well.

Great. Thanks for that color, Jeff I'll hop back into the queue. Thanks.

Thank you.

And our next question comes from Sean Stewart of TD Cowen Your line is open.

Thanks, Good morning, everyone.

Christine on the rationale for the dividend cut you touched on a few points.

No, I think you, well, you alluded to curtailment in the German market, and I think, you know, I think year to date, we've probably seen that at 7 and a half percent negative price, curtailment. I, I think our long-term assumptions aren't really far off of that plus, or minus a half to, uh, to a percent on it. Uh, you know, we really focused on on where we have contract renewals coming here in, in the first 5 years, uh, and that's where we look at. The, the PPA Market isn't really, I'd say a longer term Market, it would be more into the 5.

Sean Stewart: Got it. Thanks for taking the questions, and see you next week.

A part of it here is freeing up more capital to feeds and expanding investment opportunity set.

Jeff Hart: Thanks. Yeah, look forward to it.

Your frame and that's really what setting it and impacting and 1.

Operator: Thank you. Our next question comes from Benjamin Pham of BMO. Your line is open.

Great. Thanks for that caller. Jeff I'll hop it back into the queue. Thanks.

And the risk of front running the Investor Day next week.

Thank you.

Can you give perspective on the eight five gigawatt pipeline beyond the under construction stuff.

Benjamin Pham: Hi, morning. I just want to go back to the dividend side because obviously, Mark's quite perturbed today with the messaging, and more to come next week on some of the rationale. I'm curious, do you think with the payout ratio, it's 60% this year on your guide, and it's reasonable to think it's going to come down through 2027? What do you think is the appropriate payout ratio for you? The way we were thinking about it is you're generating $200 million of incremental free cash flow based on your guidance, and you can lever that up, that you can still self-fund growth under that alternative.

And our next question comes from Sean Stewart of TD Cowen. Your line is open.

Any perspective over the next five years, how much of that might be advanced and I ask only because it seemed like there was a line of sight on this payout ratio coming down as <unk>.

Thanks. Good morning, everyone. Christine, on the rationale for the dividend cut, you touched on a few points.

By long and Baltic power reached commercial operation.

I guess a part of it here is freeing up more Capital to feed an expanding investment opportunity set.

Just trying to gauge.

How much of that growth opportunities that you might expect to come into the midterm.

And, you know, the risk of front running the investor day next week. It

Development pipeline how much of this is just aligning the payout ratio with industry norms.

Can you give perspective on the 8 and a half gigawatt pipeline beyond the under construction stuff?

Okay.

Thanks for the question, Sean and I I do want to make sure that you come to Investor day, So I don't want to give too much of it right now, but I think it's a.

Jeff Hart: Yeah. No.

Benjamin Pham: What have you come up to the payout?

Any perspective, over the next 5 years, how much of that might be Advanced. And I asked only because it, it seemed like there was a line of sight on this pair of ratio coming down as

Jeff Hart: Yeah. No, thanks for the question. Ultimately, we'll provide color on the funding and then correspondingly read through to payout at investor day to provide that color. I'll reiterate back, this is to give a financial framework and foundation that we feel is balanced through the cycle and has guardrails. We will provide more color on that next week then.

Part of it is is that we have I would say a couple of types of projects first of all I alluded to the fact that we've been looking externally at what other people have and what projects are for sale in the market and there's a real opportunity set there that did not exist.

I long and and Baltic power reached commercial operation.

Just trying to gauge, you know, how much of that growth opportunity, set, you might expect to come into the midterm.

Development Pipeline. And you know, how much of this is just aligning the payout ratio with industry norms?

Even a year ago, but certainly not a couple of years ago and from a pricing perspective very attractive if you can bye now.

So that's interesting to us and if we can high grade through that we like to we also have a set of initiatives that we've been working on to our existing fleet that we call. It value enhancement initiatives and these are things that we would do that our near term short cycle and that deliver demonstrable rate of return in the existing fleet and it's just getting.

Benjamin Pham: Okay. Got it. I mean, 40% seems to be a magic number for a lot of folks that have cut dividends in the past. When you did your analysis, can you talk about the other alternatives you were looking at? I think you mentioned that earlier. How do you kind of think about just there's a lot of history too from companies that have cut dividends and same thing. There's more growth coming, and it just doesn't seem the public markets really care for a few years. Can you just talk about that as you think about, I guess, your own patience with this? How do you maybe differ from those case studies? Because there's been a lot out there.

More out of what we already have and so some of those projects require capital and we've been doing a lot of work to understand the capital those projects require but this is from my perspective its value lying on the ground that we would be foolish not to take it. So we wanted to find a way that we could.

We could invest in those projects.

And ensure that we have still we keep the balance sheet flexibility given the projects that we have still in construction. So the idea that we would pass up on all of these opportunities or push them well out into the future. When we modeled it. It was just a poor use of funds than investing in them sooner.

Jeff Hart: Look, I'm not going to, and Christine will obviously add on to this, as we looked at several different scenarios, looked at the best options that we felt in aggregate, balancing growth, cash returns to shareholders, and felt the plan that we'll be putting forward in balance and coming to this is the best value creation and value proposition on balance. Really, for me, it's about being disciplined through this. We need to keep strength on the balance sheet, we need to have a sustainable payout ratio, and then ultimately be able to capture opportunities in a growing demand market and be disciplined on returns. We won't chase returns down. All of that kind of goes together. We looked at a bunch of different modeling and analysis on this and feel we've landed in the best path forward for the company.

Thanks for the the question, Sean. And I, you know, I do want to make sure that you come to investor day so I don't want to give too much of it. Uh, right now, but I, I think it's a, you know, part of it is is that we have a, I would say, a couple of types of projects. Uh, first of all, I alluded to the fact that we've been looking externally at what other people have and, uh, what projects are for sale in the market. And there's a, there's a real opportunity set there that did not exist, uh, even a year ago, but certainly not a couple of years ago. And from a pricing perspective, very attractive if you can buy now. Uh, so that's interesting to us and if we can hydrate through that, we like to, we also have a set of initiatives that we've been working on through our existing Fleet that we call in the value enhancement initiatives. And these are things that we would do that are near-term short cycle and that deliver a demonstrable rate of return in the existing Fleet and it's just getting a, a more out of what we already have. And so some of those projects require capital and we've been doing a lot of work to understand the capital, those

Okay understood I guess, we'll get more detail next week.

Chuck can you give any perspective on I guess discussions with the rating agencies and appreciating investment creators.

Paramount to what you guys are focused on.

Did those discussions have any bearing on on the dividend decision.

Yes. So thanks for the question is is we're obviously in constant communication with our rating agencies.

Projects require but this is uh, from my perspective, it's value lying on the ground and we would be foolish not to take it. So uh, we wanted to find a way that we could uh we could invest in those projects and ensure that we have still we keep the balance sheet, flexibility, given the projects that we have still in construction. So the idea that we would pass up on all of these opportunities or push them, well, out into the future when we modeled it, it was just a poor use of funds then

Investing in them sooner.

And and have open dialogue with them all kind of go back to what Christine said and reiterate for us, it's making sure and reinforcing from our perspective.

Christine Healy: Ben, I do want to take the opportunity to add on to that because I can tell you that all those things that you say are very much on my mind as we've been having this big internal review and assessment of what the best thing to do in this circumstance is. Frankly, there are easier things that we could do, but they would not have been as value accretive to shareholders. Fundamentally, I had to take a very hard look into the abyss and say, what is the right thing to do here? Fundamentally, I believe that this company is very, very good at building and operating projects, and the world has a huge demand for what it is that we do.

Best use of resources on a risk adjusted basis and so for us.

And investment grade balance sheets is important I think ultimately to ensure funding through cycles.

Okay, understood. I guess we'll get more detail next week. Jeff, can you give any perspective on, I guess, discussions with the rating agencies? And, you know, I appreciate that investment grade is paramount to what you guys are focused on. Um, do those discussions have any bearing on the dividends decision?

Number one and then number two is as with the opportunity slate in front of us rebalancing to capture those in a growing market is really the drive here and so it's all of it together and.

It's really from our perspective of reinforcing the investment grade balance sheet and ensuring that funding certainty there and then I think capturing the market opportunities is really the main driver of and we felt this was the best use of shareholder resources, I guess I'll add onto that Geoff to say that.

The best use of of, you know, of resources on a risk adjusted basis. And so, for us,

This was very much a northland decision and it was driven by an enormous amount of work that's been done and we looked at many different options of how we could deliver the best value for shareholders.

Christine Healy: The idea that we would hunker down and not grow for a big chunk of time does not make a lot of sense to me. In fact, when you model it out on the numbers, it does not make sense on the numbers either. When you look at the different ways you could fund that growth, the most value-accretive way for shareholders is to do it the way that we are doing it. There is no question that we take the pain now. I am a shareholder too, and I have to tell you, I am a shareholder who really likes dividends. I can say that I am definitely in the camp right there with people who are unhappy about that. I have to say again, what are we trying to do here? We are trying to build long-term value for shareholders.

It was that was the driver for this decision.

Stop.

Okay understood.

I'll get back in the queue. Thanks very much.

Thank you. Thank you.

And our next question comes from Robert Hope of Scotiabank. Your line is open.

Good morning, everyone.

Can you add a little bit more color on that thanks.

Can you talk a little bit more color on the specific issue driving the delayed pre completion revenue on the onshore substation.

Christine Healy: That's what this plan does. I will be talking more about that at investor day. I can say hand on heart that if there was a better way to do it, I was definitely looking for it.

uh, an investment grade balance sheets, uh, is important. I think, uh, ultimately to ensure funding through Cycles, uh, number 1, and then number 2 is with the opportunity slate in front of us, uh, rebalancing, uh, to capture those in a growing Market, is really the drive here and so it's all of it together. And, uh, you know, it's really from our perspective of reinforcing, uh, the investment grade balance sheet, and ensuring that funding certain certainty there. And then I think capturing the market opportunities is really the main driver of, uh, and we felt this is the best use of shareholder resources. I guess I'll add on to that Jeff to say that, uh, this was very much, a Northland decision and it was driven by an enormous amount of work that's been done. And we looked at many different options of, uh, how we could deliver best value for shareholders. So, um, this, it was that was the driver for this decision, uh, full stop.

And when you expect it to be rectified and if you have any recourse through insurance or warranty with the manufacturer on both the cost and lost revenues.

Okay, understood I'll get back in the queue. Thanks very much.

Thank you. Thank you. Thank you.

Benjamin Pham: Yeah. No, absolutely. It seems like the old-school model of high payout and issuing equity, that's kind of old days. High-growth companies like yourself should have a lower payout ratio from a long-term perspective. I appreciate that. I mean, just one quick one for me. I get the PCR situation at Hai Long and the tech issues, and you got to manage that. That's pretty easy. Large projects can go sideways. Is there a scenario there where you're thinking about that there could be even more impact from this technical issue where you have to actually repair the station? There's more CapEx, there's delays. Is that a scenario that could be in the realm of the possibility?

Sure. Thanks, very much further question I I love, the technical and detailed questions.

And our next question comes from Robert Hope of Scotia Bank, your line is open.

So.

Basically with the onshore substation.

We're installing some cabling we were doing normal course testing and we were dissatisfied with some of the we were seeing some of that.

Morning, everyone. Uh, can you add a little bit more color on the specific thanks. Uh, can you add a little bit more color on the specific issue, driving the delayed pre-comp completion revenue, on the onshore substation,

We were dissatisfied with the results of some of the tests and when we investigated further we saw that there was a bushing that we.

Uh and when you expect it to be rectified, and if you have any recourse through insurance or warranty with the manufacturer on both the cost and lost revenues.

We felt could create problems for us over the long term. So it was functioning effectively but it created a risk for long term reliability. So we impact insisted.

That that get changed out so the supplier for that piece that for that component is a subcontractor to one of our suppliers and so we don't have a direct contractual relationship with them, but we've been working with them to make sure. We're satisfied with the replacement. So in order to do that replacement work, though we have to shut down the onshore substation for a.

Christine Healy: Ben, this particular issue that we're having with the onshore substation is completely contained. In fact, it gives me more confidence in the project team that they spotted this and were able to respond to it so effectively and so quickly. In fact, I view it as a very positive thing because it was through very, very good work at the onshore substation, and very good inspection work from our teams, that we found the issue. I don't see it as indicative of a bigger problem. I think it's a very discreet problem related to a very small bushing. It has been addressed and remedied, and no indication of any kind of larger problem there at all. In fact, I think it was well-contained and well-managed.

20 days ish I think I can't remember the exact numbers. So don't quote me on that but we have to turn off the option of turned down or turn off the onshore substation in order to complete that but then we can be.

We can be assured that the solution is there for the long haul. So I think it's the right thing to do the question is that insurance and the rest I think that it would be more a question for our supplier. Because this is part of what our supplier has to deliver for us.

Sure, thanks very much for the question. I I love the, the, the technical and detailed questions. It's a. So, uh, basically, with the onshore substation, uh, when we were installing some cabling, we were doing normal course, testing and we were dissatisfied with, uh, some of the, we were seeing some, uh, uh, we were dissatisfied with the results of some of the tests. And when we investigated further, we saw that there was a bushing that, um, we felt could create problems for us over the long term, so it was functioning effectively, but it created a risk for a long-term reliability. So, we, in fact insisted, uh, that that get changed out, so the supplier for that P, that for that component is a subcontractor to 1 of our suppliers and so, uh, we don't have a direct contractual relationship with them, but we've been working with them to make sure we're satisfied with the replacement. So in order to do that replacement work though, we have to shut down the onshore substation for uh, 20.

Benjamin Pham: Okay. Got it. Thank you.

Operator: Thank you. Thank you. I'm showing no further questions at this time. I'd like to turn it back to Christine Healy for closing remarks.

Alright, I appreciate that and then maybe just one more follow up question there.

Just given the long lead times on some equipment items when would you expect.

Christine Healy: Well, I just want to say thank you to everyone for your great questions, your engagement, and joining us today. Hopefully, we will see you at investor day. Thanks very much.

The 20 day outage to occur.

And just given US onshore I guess, you don't have to wait for any weather windows and that can be done at anytime.

Operator: This concludes today's conference call. Thank you for participating, and you may now disconnect.

Yes, no weather windows, and that's going to be done before the end of the year.

The dayish. I think, I can't remember the exact number, so don't quote me on that, but we have to turn off the off. Turn down the turn off the onshore substation in order to complete that, but then we can be, uh, we can be assured that the the solution is there for the Long Haul. So uh, I think it's it's the right thing to do. The question of uh insurance and the rest, I think that it would be more a question for our supplier because this is part of what our supplier has to deliver for us.

And we already have all the components, we have those in our top level and that our warehouse as we speak.

Alright, so the impact then in just in 2025.

So when we have theres two things going on at high long. So we have this issue at the onshore substation that commissioning of the turbines that both Jeff and I referred to that as an issue that is continuing into 2026 and in fact, we see the financial.

All right, I appreciate that. And then maybe just 1 more follow-up question there. Uh, you know, just given the long lead times on some, uh, equipment items. When would you expect, uh, you know, the 20-day outage to occur? And, you know, just giving us on tour. I guess you don't have to wait for any weather windows and that can be done at any time.

Yep, I know whether Windows, and that's going to be done before the end of the year.

Results of that in 2026, instead of in 2025, but basically this is a situation again managed within the perimeter of our supplier for the turbines. They have an obligation to deliver turbines to us that have been installed and commissioned and in fact they've passed.

And we already have all of the components; we have those in our hot little hands at our warehouse as we speak.

okay, so is the impact then in just in 2025, then

Our reliability test and they have been running for a number of days before we accept them and the handover. So.

The planning for that commissioning was based on.

Typical north sea performance, which would be they would typically do commission two to three a week.

But I think in the Taiwan, Taiwan Strait that weather conditions have been more challenging and it has been slower than anticipated.

Our supplier has I think a robust plan in order to improve on that but right. Now we are in the poor weather time, so they will be delivering on that in 2026, and hopefully they will be able to start delivering the commissioning pace that we expect to see so but right now we've seen.

So we have there's 2 things going on at how long. So, um, we have this, uh, issue at the onshore substation, the commissioning of the turbines that both Jeff and I referred to, uh, that is an issue that is continuing into 2026. And in fact, we see the financial, uh, results of that in 2026, instead of in 2025. But basically, this is a situation again, managed within the perimeter of our supplier for the turbines, they have an obligation to deliver turbines to us, that have, uh, been installed and commissioned. And in fact, they've passed, uh, uh, a reliability tests and they've been running for a number of days before we we accept them in the Handover. So, the, um, the planning for that commissioning was based on, uh,

<unk> performance on the commissioning and so theyre not where they were meant to be at this point in time again, it's fully within their contract so it.

It doesn't have an impact for us on the budget and we have enough float is still in the schedule that it does still fit within our schedule, but it does affect on pre completion revenues and pre completion revenues were part of our funding model for the project and we're still working through that.

Thank you.

Thank you.

Yeah.

And our next question comes from Nelson <unk> of RBC capital markets. Your line is open.

Great. Thanks.

Quick follow up question on the high long.

A turbine so.

I think you mentioned that Christine you mentioned over half of the turbines are now installed and I believe you stopped installing for items like early October late September so how many of the installed turbines are currently commissioned.

Supplier has, I think a robust plan in order to improve on that, but right now, we are in the poor weather time, so they will be delivering on that in 2026. And hopefully they will, uh, be able to start delivering, uh, the commissioning Pace that we expect to see. So, but right now, we've seen disappointing performance on the commissioning. And so they are not where they were meant to be at this point in time. Again, it's fully within their contract. So uh, it doesn't have an impact for us on the budget and we have enough floats, still in the schedule that it does still fit within our schedule. But, uh, it does affect on pre-comp, completion, revenues and pre-comp completion. Revenues were part of our funding model for the project and we're still working through that.

Thank you.

Thank you.

And our next question comes from Nelson, an analyst at RBC Capital Markets. Your line is open.

So roughly thanks for the question Nelson.

Great, thanks. Um, I had a quick follow-up question on the high long. Um,

The what.

Commissioning of the turbine. So

Fully commissioned right now.

<unk> that we're having is that they have to do what we call a soak test and so they have to run continually over a period of time with no alarms.

And so.

Um, I think you mentioned, Christine, that over half of the turbines are now installed. I believe you stopped installing turbines in early October or late September. So, how many of the...

So quite a few of them have started the test and then alarms go off and this is again a difference with the weather impact because in the North Sea. If you have those alarms. It's pretty quick you can go out you can check it you can remedy it and typically it's not anything wrong with the turbine its often something wrong with the sensor so that gets calibrated that can fix it it really quick turnaround.

installed turbines are

currently commissioned.

So, roughly, thanks for the question, Nelson. Um, I'm

You know what? I

Right now because the weather conditions have been very tough.

Fully commissioned right now the challenge that we're having is that they have to do what we call a soak test. And so they have to run continually over a period of time with no alarms.

Getting out to check those alarms has been quite difficult. So in terms of maybe the better answer we have 14 of them have been commissioned but they.

They continue that but they've continued to have alarms. So in terms of energized right now we have only two that are energized.

Energizer is probably for me that's the most important one those are the ones that are generating revenues. So right. Now we have two that are energized and processing revenues.

Okay, So 30, something installed or commission, but too feeding power to the grid.

Is that the right way of thinking about it.

We have 14 that our commissions, but they are under warranty as well so just because their commissions doesn't mean that that the supplier is off the hook with them. So.

And uh, so quite a few of them have started the test and then alarms go off. And this is again, a different with the weather impact. Because in the North Sea, if you have those alarms, it's pretty quick. You can go out, you can check it. You can remedy it and typically it's not anything wrong with the turbine. It's often something wrong with the sensor. So that gets calibrated, that gets fixed. It's a really quick turnaround right now because the weather conditions have been very tough, uh, getting out to check those alarms has, uh, been quite difficult. So in terms of maybe the better answer we have, so 14 of them have been commissioned, but, um, they continue they but they've continued to have alarms. So in terms of energized right now, uh, we have only 2 that are energized.

Right now of the 14 commissioned two of them are energized and functioning the way that we expect them to.

I would energize this probably for me that's the most important 1. Those are the ones that are generating revenues. So right now we have 2 that are energized and producing revenues

Okay, but over half of the turbines or install so thats like 30 something turbines installed.

okay, so 30, something installed for commission, but to feeding power to the grid,

Is that the right way of thinking about it?

We have.

Yes, 37, 37 turbines installed so the installation went very well and this is a I would say a learning for our supplier about commissioning activities. So they have a good recovery plan. So I just wanted to be clear about that they have a very strong recovery plan they've got their ATM on this.

Fourteen of them are commissioned, but they're under warranty as well. So it just gives their commissions; it doesn't mean that the supplier is off the hook with them. So, uh, right now, of the 14 commissioned, 2 of them are energized and functioning the way that we expect them to.

They will do a good job of this but we probably won't see a huge amount of progress until the weather window opens up again in the new year.

Okay, but over half of the turbines are installed, so that's like 30 something, turbines installed.

Okay, and then I know in the past you talked about the winter obviously the the weather.

It isn't great, but you have the.

Option to work during the winter right. So.

Is that supplier pretty much like if they see.

Window of opportunity during the winter they would go and try to commission more energized more projects is up.

What you are referring to in terms of.

Yes 307, 37, turbines installed. So, the installation went very well, and this is a, I would say, a learning for our supplier about, uh, commissioning activities. So they have a good recovery plan. So I, I just want to be clear about that. They have a very strong recovery plan. They've got their 18 on this. I I'm, you know, I, they will do a good job of this when, but we probably won't see a huge amount of progress until the weather window. Opens up again in the new year.

The plant so yes.

They have a team in country and they are available to go where the weather window opens so whether it's open for a day or 10 days then they and they can do that in short very short bursts of time, but the reality is that the weather has been pretty harsh the last couple of weeks and Theres only been one day and the last I think I wanted to.

okay, and then I know in the past, you talked about the winter, obviously the the weather is isn't great but you have the

Option to work during the winter. Right? So

that is that supplier pretty much like if, if they see a

Window of opportunity during the winter. They would go and try to commission more energized. More projects is that.

Save me.

Maybe as much as three weeks now, but theres only been one day that they've been able to get out there.

What, what you're referring to in terms of?

Um, the plan to so yes.

Okay, and then just overall I think in terms of the guidance you guys talked about how.

The pre completion revenues might be 150 to 200 million.

Lower than expected next year.

Can you just talk about what your assumption is I think in the financing plan roughly one there was an estimate of I think roughly a $1 billion of pre completion revenues.

They have a team in country and they are available to go with the weather window opens. So whether it's open for a day or 10 days then they and they can do that in short short bursts of time. But the reality is that the weather has been pretty harsh the last couple of weeks and there's only been uh, 1 day in the last. I think I want to say maybe as much as 3 weeks now, but there's only been 1 day that they've been able to get out there.

Yes, that's right Nelson right, so where we're at is Youre right as a $1 billion.

Okay. And then just overall. I I think in terms of the guidance, you guys talked about how

At 100%.

And the reason, we're talking about the impact into 2026.

The precomp completion revenues. Might be 150 to 200 million.

Is the any PCR is we would generate a share would actually be closed collected and the cash generated next year in conjunction with effectively Q1, and Q2 <unk> as well and so that's why we're talking about the 2026 and 150 to 200.

Next year. Um can you talk about what the new assumption is? I think in the financing plan roughly 1, there was an estimate of I think roughly a billion of pre-comp completion revenues.

<unk> is our share and that's 31%. So you can kind of back into the range. They are on a gross basis.

Okay. So.

I guess less than half.

So yes.

We are at here or anywhere from half to 60% impact give or take on the current expectation as Christine said is obviously the supplier weather windows and to see how we could potentially close the gap and other alternatives right, but that's that's effectively the good way to think about it.

And as a result, then there'll just be a larger draw on the nonrecourse debt or.

Um, yeah that that's right, Nelson, right? So uh, where we're at is you're right is a billion uh, CAD at 100%. Uh and and the reason we're talking about the impact into 2026 is the the, any pcrs we would generate this year would actually be collected in the cash generated next year, in conjunction with, you know, effectively q1 and Q2 pcrs as well. And so, that's why we're talking about the 2026 and the 150 to 200 uh, is is our share. And, you know, that's, you know, 31%. So you can kind of back into the range there on a growth spaces.

Okay, so

I guess less than half.

While we are evaluating what we could do number one is the recovery plan.

And then looking at what we can do on the project side of it as well and then obviously, we've got the financial capability to manage it as well. So we're looking at all the different avenues, there and monitoring the technical situation. So we will obviously keep everyone abreast as that is that's updated.

Of like so, so you're you're anywhere from half to, you know, 60% the impact of your take on on the current expectation and as Christine said, is is, you know, obviously the supplier, whether windows and to see how we could, you know, potentially close the gap and and other Alternatives, right? But that's that's effectively a good way to think about it.

Okay.

And then switching gears a bit in terms of the dividend. So the decision in terms of the sizing of the.

And and as a result, then they will just be a larger draw on the um, non-recourse debt. Or

The dividend cut.

So is the main.

Target too.

Internally funds.

All equity requirements going forward for the next five years is that how the dividend with size.

Well, we're we're evaluating what we could do. Number 1 is is you know, the, the recovery plan. Uh, and then looking at what we can do on the project side of it as well. And then obviously, we've got, you know, the financial capability to manage it as well. So we're looking at all the different Avenues there and and monitoring the technical situation. So we'll obviously keep everyone at breast is, is that, uh, as that's updated.

Yes, so it's Jeff here, absolutely I think our view and.

I think as I've.

Okay. Um and then Switching gears a bit um in terms of the the the dividend. So the decision like in terms of the sizing of the

If reiterated this is I believe in self funding model and I think it's.

It's an effective way to execute their plan and creates what we view as.

Uh dividend, uh, cut. So is the main

Solid accretion and shareholder value. So that is the intent is self funded plan and thats, what we intend on delivering.

Uh, Target to um, internally fund.

Great. Thanks, Jeff I'll leave it there.

Um, all Equity requirements. Going forward for the next 5 years. Is that how the dividend was sized.

Thank you.

And our next question comes from Mark Jarvi CIBC. Your line is open.

Thanks, So Jeff you talked about maybe compensation on the pre completions contingencies and project funding.

How would you handicap the likelihood of north of them would have to put some incremental capital into high long at this point.

Yeah, so it's it's Jeff here. Uh, absolutely. I think our our view and and you know, I think his reiterated, this is I I believe in self-funding model and I think it's it's an effective way to execute the plan and creates the what we view as is uh solid accretion and shareholder value. So that is the intent is self-funded uh plan and that's what uh we intend on delivering

Well look I'm not going to get into hypotheticals in percentages, what I will say as is.

Great. Thanks, Jeff. I'll leave it there.

Thank you.

I will always make sure as a CFO you need to make sure that <unk> got the liquidity and capital resources and the funding strategy to manage contingencies like this and so we have the capability to manage it corporately will continue to progress it but I always have to manage on the view that.

And our next question comes from Mark jarvey of CIBC your line is open.

I need an <unk>.

Thanks so Jeff. You talked about maybe compensation on the pre-comp completions. Contingencies in in the Project funding, how would you handicap the likelihood of North? 1 would have to put some incremental Capital into? How long at this point?

To have the liquidity to manage that but we're looking at avenues with the number one on the technical recovery plan number two and other things we can do at the project level, but.

Im not going to I'm, not going to give percentages on that right now, but I have to make sure we've got the resources to handle it.

Add to that Mark this is back to the whole idea of we have to be prudent. These are large projects and they are they are being delivered very very well and I, we stand head and shoulders above many others, who have who are delivering similar projects, but there are bumps in the road and every project I've ever been involved in in my career. So that's why we have to do.

We have to be ready to adjust to that when they come and maybe I can tell a word of it this way as I from my perspective is we will look to mitigate and manage impacts and look at the best alternative but I also have to make sure that I can I can manage it as if there is an injection required.

Got it so like this.

Component of the dividend cut would be sort of a minor element of kind.

And the messaging.

Look, look, I'm not going to get into hypotheticals and percentages. What I will say is is you know, I will always make sure as as, as a CFO you need to make sure that you've got the liquidity and capital resources and the funding strategy to manage contingencies like this. And so we have the capability to manage it corporately. Uh, we'll continue to progress it, but, uh, I always have to manage on The View that, uh, I need, uh, and have to have the liquidity to manage that, but we're looking at avenues within number 1, on the technical recovery plan. Number 2, and other things we can do at the project level. But uh, I'm not going to, I'm not going to give percentages on that right now, but I have to make sure we've got the resources to handle it. Well, I don't want to just add to that. Mark, that this is back to the whole idea of we have to be prudent. These are large projects and they're delay, they're being delivered, very, very well. And I we stand Head and Shoulders above many others who have who are delivering similar projects, but there are bumps in the road and every project I've ever been involved in in my career. So that's why we have

Yeah, I mean I'll go back to what Christine reiterated is number one it's it's rebalancing I think.

The payout to a capital intensive industry and we also see lots of opportunities both organic and inorganic in the markets, we're focusing on and so it's really to capture that opportunity rebalance too.

Do it. We have to be ready to adjust to that when they come and maybe I can, I'll, I'll read, I'll word it this way is I from my perspective is we'll look to mitigate and manage impacts and look at the best alternative, but I also have to make sure that I can, I can manage it. Uh, as if there is an ejection required.

I'd say, it's sustainable financial framework that allows us to capture those opportunities and then ultimately with that is the virtuous circle that gives you gives you a balance of protection and resources to handle contingencies as well.

Got it. So like this as a component of the dividend cut would be sort of a minor element. Is it kind of the messaging?

And then just going back in terms of the timing of announcement, we can debate about what it should happen, but it sounds like you are trying to position that you have.

Use of capital for new growth that showing up on short cycle projects and other opportunities any consideration was put into whether or not you should've analysis concurrent with new investments and how close are you on things like those short cycle needs or potentially acquiring advanced stage projects.

Well, Mark we had a lot of debate about that and I can tell you.

Opportunities. And then ultimately, with that, it's the virtuous circle. It gives you a balance of protection and resources to handle contingencies as well.

And there's no right time, because I can honestly say that if we waited to investor day than I would've expected.

Somebody would have asked me. The question then why didn't you tell us this a week ago. When you had your quarter close because.

I think what we're being transparent we theres never there's never a good time for us. So we are.

And then just going back in terms of the timing and announcement we can debate about when when it should happen. But it sounds like you're trying to position this. So that do you have a use of capital for New Growth that showing up on short cycle projects? And and other opportunities? Any consideration was put into whether or not, you should have announced this concurrent with new Investments and how close are you on things like those short cycle needs or potentially acquiring Advanced age projects?

Decided to.

To disclose the decision when the decision was made and the decision was literally just made so.

Oh, Mark, we had a lot of debate about that, and I can...

We have.

We wanted to make sure that we're transparent about that but.

I think you should not be surprised to hear some new announcements in coming days.

Okay, and then last one just Jeff in terms of the IGD rating is there a view that you will use a little bit more on balance sheet debt going forward versus how much non recourse debt used and is that sort of factored into the decision on the dividend level.

Related to investor day than I would have expected. Uh, somebody would have asked me the question. Then of, why didn't you tell us this a week ago when you had your quarter closed? Because, you know, so they uh, I think you know what? We're being transparent. We there's never, there's never a good time for this. So we, uh, we decided to, uh,

No look I think.

We will give more color on it at our Investor day here in on details on overall funding, but I would still expect the majority of our I'll say leverage or debt funding to be in the project finance realm.

To disclose the decision: when the decision was made, and the decision was literally just made. So, uh, we've, uh, we want to make sure that we're transparent about that. But, um, I think you should not be surprised to hear some new announcements in the coming days.

Clearly the corporate balance sheets and auction for different opportunities, but it that valves won't materially change. It's just to reiterate the point is is the execution of the opportunity in front of US go forward and setting up the guardrails and framework that we're sustainable through cycles.

Okay, and then last 1 is Jeff, in terms of the IG rating, is there a view that you'll be using a little bit more on balance sheet, debt? Going forward, versus how much non-recourse debt you used and is that sort of factored into the decision on the dividend level?

no, like like in, I think

Got it thanks for taking the questions and see you next week.

Yeah look forward to it.

Thank you.

And our next question comes from Benjamin Pham BMO. Your line is open.

Hi, Martin I, just wanted to go back to the dividend side, because obviously that market quite perturbed today with the messaging and.

More to come next week on some of the rationale.

You know, obviously we'll get more color on it at uh investor day here and and on details on overall funding. But I would still expect the majority of our I'll say, leverage or debt funding to be in the project fi Finance realm, uh clearly the corporate balance, sheets and options for different opportunities but it really that balance won't materially change. Uh, it's just to reiterate, the point is, is the execution, the opportunity in front of us, go forward and setting up the guard rails and framework that we're sustainable through Cycles.

I'm curious when do you think with the payout ratio it's <unk>.

Got it. Thanks for taking the questions and see you next week.

60% this year on your guide and it's it's reasonable to think it's going to come down to us through 2027.

Thanks. Yeah, I look forward to it.

Thank you.

What do you think the appropriate.

And our next question comes from Benjamin fam of BMO, your line is open.

Payout ratio for you because.

The way the way we were thinking about as you generate 200 amount or is it incremental free cash flow based on your guidance and you can lever that up.

You can still sell fund growth.

Under that alternatives, yes, no other comments on the payout.

Yes, no and thanks for the question and.

Ultimately, we'll provide color on the funding and then ultimately.

Hi morning. It's just want to go back to the the dividend side because obviously the Market's quite perturbed today, with, with the messaging and, uh, more to come next week on, on some of the rationale. But I'm curious, when do you think with the payout ratio? It's 60% this year on, on, on your guide and it's it's the reason I think it's going to come down to through 2027.

And correspondingly a read through to pay out at Investor day and to provide that color.

Uh, what do you think's appropriate payout ratio for you? Because I

And I'll reiterate back this is to give our financial framework and foundation that we feel is balanced through the cycle and has guardrails, but we will I will provide more color on that next meet them.

The way the way we were thinking about it is you're generating 200 million dollars of incremental free cash flow based on your your guidance and you can leverage that up that you can still sell fund growth.

Under that that alternative comments going to pay out.

Okay got it.

I'm also.

I mean, 40% seems to be a magic number for a lot of folks that have cut dividends in the past I mean, when do you do.

Did your analysis can you can you talk about the other alternatives you're looking at any mentioned earlier and then.

How do you kind of think about just there's a lot of history to from companies have cut dividends and same thing theres more growth coming and it just doesn't seem the public markets really care for a few years.

Yeah, no. And and, you know, thanks for the question. And, and, you know, ultimately, uh, we'll, we'll provide color on on the funding and then alter in correspondingly, uh, read through to pay to and investor day and and and to provide that color, uh, you know, and I'll reiterate back, this is to give a financial framework and Foundation that we feel is is balanced through the cycle and has guardrails, but we will, we'll provide more color on on that, uh, next week then

Can you just talk about that as you think about.

Okay, got it. And I'm also, uh,

Sure I.

I guess your own patience with this and how do you maybe differ from those case studies, because there's been a lot out there.

I mean 40% seems to be a magic number for a lot of folks that have cut dividends in the past. I mean when you did your analysis can you, can you talk about the other Alternatives uh, that you were looking at and you mentioned that earlier and then

Hello.

Our market and Christine will obviously add onto this as we've looked at we looked at several different scenarios looks at the best options that we felt an aggregate balance in growth cash returns to shareholders.

How do you kind of think about just there's a lot of history too from composite cut. Dividends and same thing. You know, there's more growth coming and it just doesn't seem the public markets really care for a few years.

The plan that we'll be putting forward imbalance in coming to this is the best value creation and value proposition on balance and really for me, it's about being disciplined through this as we need to be.

Can you just talk about that that you think about?

Your?

I guess your own patience with with this and how, how do you maybe differ from those case studies? Because there's there's been a lot out there.

Keep strength on the balance sheet, we need to have a sustainable payout ratio.

And then ultimately be able to capture opportunities in a growing demand market and be disciplined on returns we won't chase returns down and all of that kind of goes together, we looked at a bunch of different modeling and analysis on this and feel we've we've landed in the best best path forward for for the company. So then I do want to take the opportunity.

To add on to that because I can tell you that all of those things that you say are very much on my mind is we've been having this.

There's a big internal review and assessment of what the best thing to do in the circumstances.

And frankly, there are there are easier things that we could do but they would not have been as value accretive to shareholders. So fundamentally then I had to take a very hard look into the Abyss and.

This and and feel we've, we've landed in the best uh best path forward for for the company.

What is the right thing to do here and fundamentally I believe that this company is very very good at building and operating projects and the world has a huge demand for what it is that we do and the idea that we would hunker down and not grow for a big chunk of time.

Doesn't make a lot of sense to me and in fact, when you model it out on the numbers. It doesn't makes sense on the numbers either and then when you look at the different ways you could fund that growth the most value accretive way for shareholders is to do it the way that we're doing it. So there is no question that we take the pain now and I am a shareholder too and I got to tell you on the <unk>.

Our holder, who really likes dividends. So I can say that I am definitely in the camp right. There with people who are unhappy about that.

But I have to say again, what are we trying to do here and we're trying to build long term value for shareholders and that's what that's what this plan does so I will be talking more about that at Investor day, but I can say hand on heart that if there was a better way to do it I was definitely looking for it.

So been I I do want to take the opportunity to add on to that because uh I can tell you that all those things that you say are very much on my mind as we've been having this uh this uh, big internal review and assessment of what the best thing to do in this circumstance is and frankly, there are there are easier things that we could do. But they would not have been as value a creative to shareholders. So fundamentally then I had to take a very hard look into the abyss and say what is the right thing to do here and fundamentally. I believe that this company is very, very good at building and operating projects and the world has a huge demand for what it is that we do. And the idea that we would hunker down and not grow for a big chunk of time, uh, doesn't make a lot of sense to me. And in fact, when you model it out on the numbers, it doesn't make sense on the numbers either. And then when you look at the different ways, you could fund that growth, the most value of creative way for

Yes no.

Absolutely and it seems like the.

Oh.

Score model of high payout.

Additional equity that's kind of all days in hydro published yourself should have a lower payout ratio from a long term perspective. So I can appreciate that I may just one quick one for me.

For shareholders is to do it the way that we're doing it. So there's no question that we take the pain now and I am a shareholder too. And I got to tell you I'm a shareholder who really likes dividends. So uh, I can say that I am definitely in the in the camp right there with people who are unhappy about that. Uh, but I have to say again, what are we trying to do here? And we're trying to build long-term value for shareholders and

I get the PCR situation, how long in the.

And that's what that's what this blend does. So I will be talking more about that at investor day, but I can say hand on heart that if there was a better way to do it, I was definitely looking for it.

Tissues.

And kind of manage that that's a prudent use of large projects that can go sideways, but.

Yeah, no. I absolutely, and it seems like the...

Is there a scenario there where youre thinking about that there could be even more impact from this technical issue, where you have to actually repair to station, there's more capex theres delays like theirs.

The old, old school model of high pad.

Is that a scenario.

It could be in the realm of possibility.

Equity. That's that's kind of a old days and high growth. Companies yourself should have a lower payout ratio from a long term so I could appreciate that. I mean just 1 quick 1 for me um

So Ben this.

This particular issue that we're having with the onshore substation is completely contained and in fact, it gives me more confidence in the project teams that they spotted this and we're able to respond to it so effectively and so quickly. So in fact I view it as a very positive thing because it was only it was through very very good work at the.

I get the PCR situation. I how long and the tech code issues, um, and you get to manage that, that's, that's pretty large projects that that can go sideways. But is, is there a scenario there where you're thinking about that? There could be even more impact from this tactical issue, where you have to actually repair the station. There's more tapbacks. There's delays like there's

Onshore substation and very good inspection work from our teams that we've found the issue. So I don't see it as indicative of a bigger problem. I think is a very discrete problem related to a very small bushing and so it has been addressed and remedied and no indication of any kind of larger problem. There at all in fact, I think it was well contained and well managed.

Is it that a scenario like you could be in the wrong with the possibility?

Okay got it thank you.

Okay.

Thank you. Thank you I'm showing no further questions at this time I'd like to turn it back to Christine Healy for closing remarks.

So Ben this this particular uh issue that we're having with the onshore substation is uh completely contained. And in fact, it gives me more confidence in the project team that they spotted this and were able to respond to it. So effectively and so quickly. So in fact I view it as a very positive thing because uh it was only. It was through very very good work at the onshore substation and very good inspection work from our teams that we found the issue. So I don't see it as indicative of

I just wanted to say thank you to everyone for your great questions and your engagement and joining us today and hopefully we will see you at Investor day, Thanks very much.

This concludes today's conference call. Thank you for participating and you may now disconnect.

Of a bigger problem. I think it's a very discreet problem related to a very small bushing and so it has been addressed and remedied and no indication of any kind of larger problem there at all. In fact, I think it was well contained and well-managed

Okay, got it. Thank you.

Thank you. Thank you. I'm showing no further questions at this time. I'd like to turn it back to Christine Healey for closing remarks.

Well, I just want to say thank you to everyone for your great questions and your engagement and joining us today and uh hopefully we will see you at investor day. Thanks very much.

this concludes today's conference call, thank you for participating and you may now disconnect