TransAlta Corporation

Miranda and I will be your conference operator today. At this time, I would like to welcome everyone to TransAlta Corporation's fourth quarter 2021 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star, then the number one on your telephone keypad. If you'd like to withdraw your question, please press start, then the number two. Thank you. Ms. Valentini, you may now begin your conference.

Great. Thank you, Miranda. Good morning, everyone, and welcome to TransAlta's fourth quarter and 2021 year-end conference call. With me today are John Kouzanouris, 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 the information provided during this call is subject to the forward-looking statement qualifications set out here on 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 adjusted 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 year's results, along with our expectations for 2022. 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 2021 Annual Results 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 Pekani, the Kainai, the Tsutsina, and the Stony Dakota First Nations, as well as the home of Métis Nation Region 3. It's a pleasure today to share with you our results and achievements for 2021. TransAlta had a record year, and I'm extremely proud of the performance of our company and our employees and the outstanding progress we have made in advancing our priorities. In 2021, we delivered 1.26 billion of adjusted EBITDA, a 36% increase over 2020 results. We also delivered free cash flow of $562 million, or $2.07 per share, a 59% increase over 2020 on a per share basis, exceeding the top end of our restated guidance range. And in September, given our view of 2021 performance and our expectations for 2022, we increased our common share dividend by 11% to an annualized $0.20 per share. Our performance was driven by our ability to optimize our fleet and deliver operational performance, which enabled us to capture the higher prices experienced in Alberta, demonstrating the underlying value of our diversified fleet. In addition to the strong results in our generation fleet, energy marketing also had an excellent trading results across our US power and natural gas desks, where we capitalized on our deep knowledge of North American power markets and captured market opportunities. In 2021, we were able to deliver on all of our key priorities, particularly in the areas of growth and carbon transition. In terms of carbon transition, the three-year transition plan that we started in 2019 to phase out coal-fired generation in Canada has been realized. We completed our final coal-to-gas conversion and are now fully off coal in Canada and running on lower carbon-emitting natural gas. This marks the achievement of an important milestone nine years ahead of the government target of 2030. Our coal transition is among the most meaningful carbon emission reduction achievements in Canada. Overall, we've reduced our annual CO2 emissions by 29 million tonnes since 2005, including 3.9 million tonnes in 2021, a 24% reduction year over year. And we've adopted a more ambitious target for emissions reductions. targeting a 75% CO2 emissions reduction by 2026 from 2015 levels, and we're proud to be the first publicly traded electricity company in Canada committed to setting a science-based emissions reduction target. Shifting to growth, our development team secured 600 megawatts of renewables growth during the year, representing 30% of our five-year growth target, with growth in each of our three core markets in 2021. We achieved commercial operation and completed a project financing our wind rise, our largest wind facility in Alberta, and we continue to monitor new and emerging technologies for deployment in the back half of the decade and beyond. We recently made an investment in Econa to advance the commercialization of their hydrogen technology platform. If successful, this technology would produce cleaner and lower cost hydrogen and has the ability to be sited wherever natural gas infrastructure exists today. I remain confident in our ability to deliver on the remainder of our two gigawatt clean electricity growth plan, and we are targeting to reach investment decisions on another 400 megawatts of renewables growth in 2022. We ended the year with record liquidity, and we are well positioned to fully fund our renewable growth pipeline. Strong performance from our hydro fleet, coupled with the addition of wind rise and the North Carolina solar portfolio, led to EBITDA contribution from renewables and storage assets increasing from 35% in 2020 to 43% in 2021. As I mentioned, in 2021, we secured 600 megawatts of growth projects across Canada, the US, and Australia, a solid start to our 2 gigawatt target by 2025. This represents a capital investment of approximately $1 billion and delivers 30% of our five-year target on a megawatt basis. Combined, these projects will contribute just under $100 million in EBITDA once fully operational, achieving 40% of our five-year EBITDA target. We closed the North Carolina solar acquisition in November, which is already in service, and we currently have 178 megawatts of projects actively under construction in Alberta and in Western Australia. And later this year, we will start construction on our White Rock project in Oklahoma. All of our construction projects are expected to be funded with existing liquidity. In December, we entered into two long-term PPAs with a new investment-grade customer for the full output from the 300-megawatt White Rock wind projects in Oklahoma. The delivery of low-cost, reliable, and clean energy from White Rock supports our customer sustainability goals and will nearly double our wind fleet in the United States from 375 megawatts to 675 megawatts. Commercial operation is expected to be achieved in the second half of 2023, and these wind facilities will be our sixth and seventh in the U.S., and combined will be our largest U.S. wind project. As I turn now to our U.S. development pipeline, you can see that the White Rock project has moved from the advanced development category into the under-construction category. We still have over 800 megawatts of potential development sites in the U.S. across a number of projects in several key markets. Our most advanced site is now the 200 megawatt Horizon Hill project in Oklahoma, and we're pleased with the progress that our team is making as they advance that project towards a final investment decision. The demand for renewables remains strong in the U.S., and we see plenty of opportunity for growth in that market. We're looking at a number of opportunities to grow our development pipeline in the U.S. and expect to add some excellent sites to our pipeline over the course of 2022. 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 as well as wind and solar. This includes our water charger project, where we've recently filed our application with the Alberta Utilities Commission. The project will build a 180 megawatt battery storage facility near the Ghost Reservoir on the Bow River. The batteries would be charged from our existing hydroelectric facility there and dispatched to the provincial power grid when demand for power is high. We continue to develop a number of wind development sites in Alberta as we see continued demand for renewable PPAs in the market from corporate customers. Our team is actively seeking opportunities to contract our sites and advance those projects into the construction phase. In Australia, we've moved the 40-megawatt Mount Keith capacity and transmission expansion projects to the advanced development stage. We're seeing growing opportunities in Western Australia in support of our remote mining customers. Our team is developing customized clean power solutions to meet the ESG objectives of our customers in the most cost-effective manner. We're advancing several opportunities there, and we expect to reach final investment decision on additional projects with BHP and others in the coming months. I'll now turn it over to Todd to take us through our financial results for the year.