TransAlta Corporation

Good morning, ladies and gentlemen. My name is Michelle, and I will be your conference operator today. At this time, I would like to welcome everyone to TransAlta Corporation's third quarter 2021 results conference call. All lines have been placed on mute to prevent any background noise, and after the speaker's remarks, there will be a question and answer session. If you would like to ask a question during that time, simply press star, then the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the two. I would now like to turn the conference over to Chiara Valentini. Please go ahead.

Thank you, Michelle. Good morning, everyone, and welcome to TransAlta's third quarter conference call. With me today are John Cusignoris, President and Chief Executive Officer, Todd Stack, EVP Finance and Chief Financial Officer, and Kerry O'Reilly Wilkes, EVP Legal, Commercial and External Affairs. Today's call is being webcast and I invite those listening on the phone lines to view the supporting slides that are posted on our website. A replay of the call will be available later today and the transcript will be posted to our website shortly thereafter. All of the information provided during this conference call is subject to the forward-looking statement qualifications set out here on our slide two. detailed further in our MD&A and incorporated in full for the purposes of today's call. All amounts referenced during the call are in Canadian currency unless otherwise noted. The non-IFRS terminology used, including comparable EBITDA, funds from operations and free cash flow are also reconciled in the MD&A for your reference. On today's call, John and Todd will provide an overview of the quarter's results along with our expectations for the balance of 2021. After these remarks, we will open the call for questions. And with that, let me turn the call over to John.

Thank you, Kiara. Good morning, everyone, and thank you for joining our third court call. As part of our commitment towards reconciliation, I want to begin by acknowledging that TransAlta's head office, where we are today, is located in the traditional territories of the Nitsitapi, the people of the Treaty 7 region in southern Alberta, which includes the Siksika, the Pikani, the Kainai, the Tsutsina, and the Stoney Nakoda First Nations, as well as the home of Métis Nation Region 3. We've had another exceptional quarter, and I'm extremely pleased with the performance of our company and the progress that we have made in advancing our priorities. In Q3, we delivered $381 million of comparable EBITDA, a 49% increase over the prior period, leading to a 79% increase in free cash flow per share quarter over quarter. On a year-to-date basis, We have generated $993 million in comparable EBITDA, a 43% increase over 2020 results, resulting in free cash flow per share of $1.68, a 52% increase year over year. We also announced the common share dividend increase of 11% during the quarter, representing an annualized dividend of $0.20 per share. And our liquidity remains strong. We're positioned to fully fund our renewable growth pipelines. Given our strong year-to-date performance and our expectations for the balance of the year, we were pleased to announce earlier today a further increase to our EBITDA and free cash flow guidance for 2021, up by another $100 million and $50 million, respectively, at the midpoints compared to the guidance we provided in our Q2 report. Our performance this quarter was driven by our ability to optimize our fleet and deliver operational performance that enabled us to capture the higher prices experienced in Alberta, demonstrating the underlying value of our diversified fleet. Energy marketing also had an excellent quarter, with strong trading results across our U.S. power and natural gas desks, which capitalized on our deep knowledge of North American power markets and ability to capture market opportunities. We're also on our way to delivering on the two gigawatts of incremental renewables in support of our clean electricity growth plan, which we announced at our investor day. During the quarter, we progressed the number of our key priorities. We announced the closing of the acquisition of our 122 megawatt North Carolina solar portfolio. We advanced the construction of our 206 megawatt windrise project. Construction is now complete, and we expect the wind farm to reach COD later this month. We issued full notice to proceed to our EPC contractor on the Northern Goldfields solar and storage project, with construction expected to begin in the first quarter of 2022. We commenced construction of our 130-megawatt Garden Plain wind project here in Alberta. We began the coal-to-gas conversion of Keep Hills 3, which is now expected to be completed later this month as it's now undergoing commissioning and testing. With the completion of this final conversion and the closure of the Highvale mine, effective December 31, all of our Alberta facilities will be generating on lower carbon-emitting natural gas. We also announced our decision to suspend the Sundance 5 repowering project, and retire our remaining Canadian coal units, Keep Hills Unit 1 at the end of this year and Sundance Unit 4 early in 2022. Finally, we were proud to be recognized at the COP26 Powering the World Past Coal event as the world takes action to address climate change. TransAlta's decision to join the 165-member alliance, given our success to date as a leader in energy transition, was a natural extension of our commitment to delivering clean energy solutions for our customers, strong returns for our investors, and reliable energy for the communities we serve. Unfortunately, we experienced a tower collapse at our Kent Hills 2 wind facility at the end of the quarter. The remaining turbines at Kent Hills 1 and Kent Hills 2 wind facilities have been taken offline and are undergoing engineering and safety assessments. Initial findings have identified subsurface crack propagation at several of the foundations indicating that a significant number of foundations will need repair or replacement. As you would expect, we're engaged in discussions with New Brunswick Power about the incident and appreciate the support they have provided us to date. We will share additional information on our return to service plan as it becomes available. Turning now to growth, we are pleased to announce the closing of the acquisition of our 122 megawatt North Carolina solar portfolio. The portfolio consists of 20 operating facilities across North Carolina all of which have long-term contracts with subsidiaries of Duke Energy. The project will be held by TransAlta Renewables through an economic interest. This portfolio expands our solar footprint in the United States and as a high quality customer in a region where we see significant growth opportunities given North Carolina's transition away from coal. The portfolio is expected to contribute approximately US $9 million in EBITDA annually. Construction of Windrise is complete with all 43 turbines complete. We now expect to achieve COD later this month. The 206-megawatt project is under a 20-year PPA with the Alberta Electric System Operator and will extend the life of our contracted portfolio at TransAlta Renewables. This is TransAlta's 10th wind facility in Alberta and will be the first project to reach commercial operation out of the eight projects awarded by the ISO through the second and third rounds of the renewable energy procurement process in December of 2018. The completion of Windrise ahead of our peers demonstrates TransAlta's execution capabilities and commitment to supporting our customer needs for clean energy. As you know, earlier this year, we launched the 130 megawatt garden plane project, supported by an 18-year agreement with Pembina Pipeline for 100 megawatts of the capacity and associated environmental attributes. We've advanced the development of the wind farm through our procurement processes and secured all regulatory permits and approvals. Initial construction activities have started, and we expect to reach commercial operation during the latter part of 2022. A significant portion of the project costs have been fixed, which limits our exposure to any inflationary pressures being experienced in the marketplace. We continue to actively market the remaining 30 megawatts and are aiming to fully contract the facility by the end of this year. We expect the project to deliver between 14 and 18 million in comparable EBITDA on a full year basis. The highly contracted nature of the Garden Plain project makes it a strong candidate for drop-down to TransAlta Renewables. We spent a lot of time discussing our development pipeline and growth targets at our Investor Day in September, so I won't spend a lot of time repeating that today. I would like to highlight that we continue to progress the development activities on the 500 megawatts of advanced stage wind projects at Horizon Hill, and White Rock East and West, all of which are located in Oklahoma. We're engaged in exclusive discussions to contract the output from the facilities and are targeting to reach the final investment decisions in relation to these projects over the coming few months. We remain disciplined on growth in Canada, including here in Alberta. We've shifted away from merchant baseload gas generation and are now exploring opportunities to maximize the value of our hydro and wind fleets with a new focus on battery storage and solar. In Australia, we're delivering customized clean power solutions to meet our customers' ESG objectives in the most cost-effective manner, with a focus on advancing several opportunities in Western Australia in support of our remote mining customers. Overall, we have approximately 3 gigawatts of development opportunities in various geographies and with various technologies, including wind, solar, hydro, and storage. Our development teams in Canada, Australia, and the United States are working hard to deliver on our $3 billion capital investment target. I now turn it over to Todd to take us through our financial results for the quarter.