TransAlta Corporation

Good morning, my name is Sylvie and I will be your conference operator today. At this time, I would like to welcome everyone to TransAlta Corporation's third quarter 2022 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 number one on your telephone keypad. And if you would like to withdraw from the question queue, please press star then number two. Ms. Tumte, you may begin the conference.

Thank you, Sylvie. Good morning, everyone, and welcome to TransAlta's third quarter 2022 conference call. With me today are John Cusignaris, President and Chief Executive Officer, Todd Stack, EVP Finance and Chief Financial Officer, and Carrie 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 conference call is subject to the forward-looking statement qualification 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 reconciled in the MD&A for your reference. On today's call, John and Todd will provide an overview of the quarter's results. After these remarks, we will open the call for questions. With that, let me turn the call over to John.

Thank you, Holly. Good morning, everyone, and thank you for joining our third quarter results call for 2022. 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 Fani, the Kainai, the Tsutsina, and the Stony Nakoda First Nations, as well as the home of Métis Nation Region 3. TransAlta had an exceptional third quarter. I'm extremely pleased with the performance of our company. We delivered 555 million of adjusted EBITDA, a 38% increase over the prior period, with performance significantly above expectations from our Alberta electricity portfolio. The results demonstrate the value of our strategically diversified fleet in Alberta. Our performance was driven by our ability to optimize our fleet, adjust our portfolio position to respond to changing market conditions, and deliver operational performance which enabled us to capture the higher prices experienced in Alberta. As a result, our financial results were ahead of expectations for the quarter. We generated free cash flow of $393 million, or $1.45 per share, an 87% increase quarter over quarter. On a year-to-date basis, we have generated $1.1 billion in adjusted EBITDA, a 5% increase over 2021 results, and free cash flow per share of $2.38, a 28% increase year over year. With this performance across the fleet and our continuing positive outlook on market expectations for the balance of the year, we've revised our 2022 financial guidance upwards, increasing our adjusted EBITDA and free cash flow guidance by $295 million and $245 million, respectively, at the midpoints, compared to our original guidance for 2022. We also announced that our board of directors approved a common share dividend increase of 10%, representing our fourth consecutive annual increase. The common share dividend will increase by two cents to an annualized rate of 22 cents per share, starting in January, 2023. On the growth side, our development team has added approximately 550 megawatts of development opportunities to our growth pipeline during the quarter, bringing our total development pipeline to between 3.5 gigawatts to 4.7 gigawatts. I remain confident in our ability to deliver on the remainder of our 2 gigawatt clean electricity growth plan. We have over 300 megawatts of advanced stage growth that we're working to secure in the upcoming quarters. Switching to our recontracting activities, we are pleased to announce the award of new five-year ISO capacity contracts at our Sarnia cogeneration and Melanchthon wind facilities in Ontario. Together with the industrial customer contract extensions we executed earlier this year at Sarnia, the ISO capacity contract extends the life of the Sarnia facility and permits us to continue to serve our industrial customers in the region. And finally, we were active during the quarter with our normal course issuer bids. We've returned another $16 million to our shareholders through the buyback of 1.3 million common shares. We've completed 34 million in share buybacks so far in 2022 and expect to continue to do so in light of the company's current share price, which we view as being undervalued. We're proud of the progress made on the execution of our clean electricity growth plan. We've secured 800 megawatts of growth projects across Canada, the U.S. and Australia, representing 40% of our 2 gigawatt target by 2025. These projects will contribute approximately $149 million in EBITDA once fully operational, providing 59% of our five-year incremental annual EBITDA target of $250 million. And as I mentioned earlier, we have over 300 megawatts of advanced stage generation and transmission growth opportunities in development, representing additional growth of approximately $500 million. With the recent Inflation Reduction Act, we've increased our EBITDA estimates for Horizon Hill and White Rock to now reflect 100% qualification for production tax credits. The capital costs for these projects will also increase as bonus payments are now payable to the turbine supplier tied to the higher PTC qualification. Turning to the U.S., we've made great progress toward our goal of expanding our development pipeline in support of achieving our five-year growth targets. Our new projects there include the 225 megawatt Trapper Valley site, an expansion of our existing Wyoming wind facility, the 152 megawatt Monument Road wind site in Nebraska, the 242 megawatt Dos Rios site in Oklahoma, and a 100 megawatt solar project, which is also located in Oklahoma. In Canada, we continue to remain disciplined on growth. Our Tempest and Water Charger projects are at an advanced stage of development, and we've added the 100-megawatt Red Rock wind site in Alberta to our development pipeline. We're presently reviewing the tax credits announced in the recent fall economic statement to assess how they might support our Canadian growth. In general, we view the pronouncements under the economic statement to be positive for our business. And we're also seeing growing opportunities in Western Australia in support of our remote mining customers. We're targeting to reach a final investment decision on additional projects with BHB, and we've increased the expected size of the gold fields and the Southern Cross energy expansion projects in Western Australia. I'll now turn it over to Todd to take us through our financial results for the quarter.