TransAlta Corporation

Good morning. My name is Tawanda and I will be your conference operator today. At this time, I would like to welcome everyone to TransAlta Corporation fourth quarter and four year 2024 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 the question during this time, simply press star 11 on your telephone keypad. If you would like to withdraw your question, please press star followed by 11 again. Thank you. Ms. Perez, you may begin your conference.

Thank you, Tawanda. Good morning, everyone. My name is Stephanie Perez, and I am the Vice President of Investor Relations and Corporate Strategy of TransAlta. Welcome to TransAlta's fourth quarter and full year 2024 conference call. With me today are John Kousinouris, President and Chief Executive Officer, Joelle Hunter, EVP Finance and Chief Financial Officer and Blaine VanMell, EVP Commercial and Customer Relations. 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 script will be posted to our website shortly thereafter. All the information provided during this conference call is subject to the forward-looking statement qualifications set out here on slide 2, detailed further in our MD&A and incorporated for the purposes of today's call. All amounts referenced are in Canadian dollars unless otherwise noted. The non-IFRS terminology used, including adjusted EBITDA and free cash flow, are reconciled in the MD&A for your reference. On today's call, John and Joel will provide an overview of TransAlta's quarterly and annual results. After these remarks, we will open the call for questions. With that, let me turn the call over to John.

Thank you, Stephanie. Good morning, everyone, and thank you for joining our fourth quarter and full year conference call for 2024. As part of our commitment towards reconciliation, I want to begin by acknowledging that our company operates on the traditional territories of Indigenous peoples across Canada, Australia, and the United States. We recognize the rich and diverse histories, cultures, and contributions of the First Nations, Inuit, Métis, Aboriginal, and Native American communities. It is with gratitude and respect that we thank the peoples who have lived on these lands for generations for reminding us of the ongoing histories that precede us. TransAlta delivered strong financial and operational performance in 2024. at the upper range of our guidance, reflecting the value of our diversified portfolio and proactive hedging strategy and the exceptional performance of our fleet and energy marketing segment. During the year, we delivered adjusted EBITDA of $1.25 billion, free cash flow of $569 million, or $1.88 per share, and average fleet availability of 91.2%. We also delivered on a number of key priorities and strategic initiatives. First, we closed the Heartland acquisition late last year and are now in the process of fully integrating Heartland's 1.75 gigawatts of complementary assets into our Alberta portfolio. The transaction enhances our competitive position in Alberta by ensuring we maintain a robust and diversified portfolio in the province. Second, our growth team had a strong year, completing the 200 megawatt Horizon Hill wind facility the 300 megawatt White Rock wind facilities, and the Mount Keith transmission expansion. We also fully completed the Kent Hills rehabilitation project. These assets will collectively contribute over $175 million in adjusted EBITDA to our company annually. Third, we returned $214 million, or $0.71 per share, to our shareholders through dividends and share repurchases. With our share repurchases executed at an average price of $10.59 per share. Returning capital to our shareholders is a key part of our capital allocation strategy, which we adapt to market conditions and the timing and progress of our growth opportunities. Our practice is to always have a normal course issuer bid in place, and we expect to continue to make accretive share buybacks in 2025 of up to $100 million. We continue to advance the significant contracting and development opportunities that we see at our legacy thermal sites in both Washington State and Alberta. Fifth, we continue to reduce our CO2 emissions. Since 2015, we have reduced Scope 1 and 2 greenhouse gas emissions by 22.7 megatons, or 70%, a remarkable achievement considering the size and diversity of our fleet. and we will cease coal fire generation from our single remaining coal unit by the end of 2025, which will further reduce our emissions. And finally, based on our strong performance in 2024 and our confidence in the future, we're pleased to announce that our board of directors has approved an 8% increase to our common share dividend to 26 cents per share on an annualized basis. This represents our sixth consecutive annual dividend increase affirming the company's commitment to returning value to shareholders. Our balance sheet continues to provide us with strength and flexibility. With over $1.6 billion in available liquidity, including approximately $334 million in cash, we're very well positioned to execute our strategic priorities. We successfully closed the acquisition of Heartland on December 4, adding 1.75 gigawatts of complementary flexible capacity to our company including contracted cogeneration, gas thermal generation, and peaking generation, along with transmission capacity, all of which will be needed to support the energy transition and reliability in the Alberta electricity market. 60% of the revenues are contracted with leading counterparties with a weighted average remaining life of 15 years, providing added diversification to our cash flows and tempering our merchant exposure. The regulatory review process for the transaction with the Federal Competition Bureau was a lengthy one and resulted in our agreeing to divest Harlan's Poplar Hill and Rainbow Lake facilities in order to complete the transaction. This led to a purchase price reduction of $80 million. The revised purchase price for the transaction was approximately $542 million, consisting of a cash payment of $310 million, as well as the assumption of $232 million of low-cost debt. An economic benefit adjustment of a further $95 million ultimately resulted in the net cash payment of $215 million, which was funded through a combination of cash on hand and draws on our credit facilities. The overall net price, inclusive of debt, works out to approximately $270 per kilowatt and an attractive EBITDA multiple of 5.4 times. And we're in the process of realizing approximately $20 million of corporate synergies on a pre-tax basis in connection with the transaction. We're pleased to welcome Harlan to TransAlta and are happy with how the integration is progressing. At our Centralia site, we're exploring multiple opportunities to meet load growth and enhance reliability in the region. We're currently advancing discussions with the customer on a redevelopment opportunity to extend the operating life of our legacy Centralia site through a contracted coal to gas conversion. We're also considering other opportunities to build out the energy campus on our significant land holdings, including potentially wind, solar, batteries, pump storage, and next generation technologies. We expect to be able to share detailed development plans for Centralia during the first half of 2025. We are also advancing opportunities at our legacy thermal sites in Alberta, which we believe offer ideal conditions for data center opportunities including speed to power, expansion potential, tier four reliability, competitive power pricing, and supportive renewable product offerings. Our work is progressing through three phases. The first phase, which we completed in the fall, was the socialization phase. In this phase, we engage with potential customers, highlighting our service offerings, and gauging interest in our Alberta sites. The second, technical phase, is ongoing and includes location assessments, geotechnical work, zoning and interconnection applications, and we recently submitted our key pill site into the interconnection queue through a two-phase submission over the course of 2027 and 2028, permitting and engineering assessments, supply chain engagement, and the evaluation of existing fiber optic networks, water rights, and cooling pond capabilities. This phase is advancing well towards detailed and de-risked commercial offerings that we can showcase to our potential customers. The next and final phase is commercialization, which includes contracting with high-quality counterparties and the beginning of construction at our sites. We aim to secure exclusivity with key partners by mid-2025 with detailed design and definitive agreements expected later in the year. We anticipate operational data centers 18 to 24 months after signing definitive agreements. I'll now pass it over to Joel.