Boralex Inc.

Good morning ladies and gentlemen and welcome to the Boralex first quarter 2025 financial results conference call. Please note that all lines are in a listen-only mode. Following the presentation we will conduct a question and answer session in which financial analysts, shareholders and investors will be invited to ask their questions by pressing star one and one on their telephone. Please also note that today's conference is being recorded. For webcast participants you can also ask questions during the conference but they will be answered by email after the call. Finally media representatives are invited to contact Camille Aventure senior advisor public affairs and external communications at Boralex. Her contact information is provided at the end of the quarterly press release and I would now like to turn the conference over to Colleen Dessiomore director investor relations for Boralex. Please go ahead.

Thank you operator. Good morning everyone. Welcome to Boralex first quarter results conference call. On today's call Patrick Dikosch our president and chief executive officer will provide an update of our business. Afterwards Bruno Gilmets our executive vice president and chief financial officer will present the financial highlights of the quarter. Then we will be able to answer your questions. During this call we will discuss historical as well as forward looking information. When talking about the future there are a variety of risk factors that have been listed in our different filings which can materially change our estimated results. These documents are all available for consultation on SEDA. In our webcast presentation the disclosed results are both on a consolidated and a combined basis. Please note that combined is a non-GAAP financial measure and does not have standardized meaning under IFRS. For more details see the non-IFRS and other financial measures section in the MDMA. Mr. Dikosch will now start with his comments. Please go ahead Patrick.

Thank you Colleen and good morning everyone. It's a pleasure for me to present our results and achievements for the first quarter of 2025. This quarter we observe significant variability in resource availability impacting our financial results. The strong performance of our wind assets in Canada only partially offset unfavorable wind conditions in France. Total combined production was down one percent in the first quarter compared to 2024. ABDA on a combined basis was 199 million which is a decrease of 19 million compared to Q1 2024. This change is due to a lower wind resource in France and anticipated lower power prices in short-term contract for wind farm in France than in the same period of 2024. Bruno will cover later in more detail our first quarter financial results. During this first quarter we continue to make strong progress toward our growth and diversification strategies. Particularly with the commissioning of our Lion King wind farm in Scotland, our first operating asset in the United Kingdom. An important milestone in a very promising market for Boralex. We now have over 3.2 gigawatt of assets in operation in our four key geographies and 660 megawatt of project in construction and ready to build phase with commercial operations planned in 2025 and 2026. Looking ahead we look forward to present our 2025-2030 strategic plan at our investor day which will be held on June 17 in Toronto. We're very positive on the future of our business and will continue to be ambitious in our growth and diversification strategies. Regarding markets conditions, the demand for renewable energy in our targeted markets remains high driven by different factors such as favorable government incentives, population growth, industrial and digital expansion, creating new opportunities for our development activities. In Canada, following their recent victory in the federal election, the Liberal Party led by Mark Carney has committed to maintain the clean energy investment tax credit and doubling the Indigenous loan guarantee program to 10 billion. Consequently, Quebec and Ontario remain strong potential growth markets for Boralex. Our local expertise and good relationships with First Nations and communities provide a solid foundation for preparing upcoming bids in both geographies. In the United States, ongoing uncertainty surrounding potential policy changes and the implementation of tariff has led to near-term upward pressure and economic volatility in the first quarter of 2025. Still, power demand in the United States remains strong driven by growth in US manufacturing and the expansion of data centers. It is therefore particularly important to stay focused on our long-term strategy of growth in the US market as we believe that renewable energy projects, particularly solar and onshore wind project, are well positioned to meet this rising demand. In New York State, the government will have to rely more heavily on onshore renewable energy to meet its climate goals following a federal order to stop the development of offshore wind facilities. In this market, we're still waiting for the final results of the NYSERDA 2024 request for proposals expected to be announced in the coming weeks. While I have already highlighted the operation of our Lymecain wind farm, I would like to take this opportunity to thank the Boralex UK team for their hard work and effort in bringing this project to completion. The successful commissioning of Lymecain is also due to the valuable consultation work with local communities carried out by our team, who has been present on the ground since the first stages of the project. The operation of Lymecain enables us to strengthen our strategic position in the UK where we have strong growth ambitions for the coming years. We're now preparing ourselves to submit bids in the next AR7 RFP expected this summer. During the first quarter, we also continue to progress with construction of our project in Canada. The commissioning of our APWIT project is expected this summer. Nearly all of the 34 turbines are now installed. Despite the later than anticipated start of operation and cost overruns, the internal rate of return of the project remains in line with our targeted range. In Ontario, the construction of our two battery storage projects, Ayersville and Tilbury, are advancing as planned with commissioning scheduled by the end of this year 2025. Our Deneige Sud project wind farm is also progressing unscheduled with commissioning planned for the end of 26 or beginning of 27. In France, we also have three projects under construction, all located in the region -de-France. Project -les-Boulans and Fepvin-Palphard totaling 29 megawatts will start operating in the coming months, while Les 100 manquaudés project just entered the construction phase with the commissioning scheduled next year. With this project, Boralex is positioned in this historically significant region where the company operates more than 500 megawatts. I will now rapidly review the main variances in our portfolio of projects under development and growth path. The increase in the pipeline was mainly due to the addition of wind and solar projects in Europe and North America in early stage. The increase in capacity of wind and solar projects in Europe and North America in early and mid stage. And in total, our pipeline of early, mid and advanced stage projects now consists of project totaling nearly 7.1 gigawatts of wind, solar and storage projects. In the first quarter, the growth path represents a capacity of 887 megawatts, a decrease of 104 megawatts compared to the previous quarter, mainly explained by the transition to operational phase of the lime-kin wind farm. This completes my part. I will now let Bruno cover the financial portion in more detail and we'll be back later for the question period. Bruno?

Thank you, Patrick. Good morning, everyone. This quarter, total combined production was down 1% compared to the same quarter last year and 11% lower than anticipated due to unfavorable weather conditions in France. Our combined EBITDA amounted to 199 million, down 19 million, and consolidated AFFO amounted to 74 million, down only 4 million compared to the first quarter of 2024. I will now provide a more detailed overview of our quarterly financial results starting with production. In North America, total combined production for the quarter was 8% higher than the same quarter last year and in line with anticipated production. Production from wind assets in North America was 15% higher compared to the same quarter last year and 6% higher than anticipated for comparable assets. Production for the hydro sector was 29% lower than last year and 13% lower than anticipated, mainly due to unfavorable weather conditions in the United States. Production from solar assets in the US was 17% higher than the same quarter last year and 12% higher than anticipated. In Europe, total production was 16% lower compared to the same quarter last year and 28% lower than anticipated, attributable to unfavorable wind conditions in France. As mentioned by Patrick, the good performance of wind assets in North America only partially offset the lower contribution from wind assets in Europe. The decrease in production, along with the impact of less favorable power prices in our short-term contracts in France, affected our revenues and EBITDA. AFFO was impacted by the decrease in EBITDA, partially offset by lower distributions paid to non-controlling shareholders in Europe compared to the same quarter last year and higher distributions received from our joint ventures. This quarter, our balance sheet remained strong with 504 million in available cash resources and authorized financing and 388 million in cash and cash equivalent as of March 31st. Total debt increased to 4.1 billion with project debt representing 89%. During the first quarter, our finance team successfully extended the term of the company's revolving credit facility until February 2030, improving our financial flexibility to continue to support our growth. In April, the letter of credit facility guaranteed by EDC was also increased from 350 million to 470 million until April 2027. Lastly, for this quarter, we have continued to make good progress on our CSR targets. For more information on our CSR strategy, I invite you to read our 2024 CSR report released in February. In conclusion, we continue to develop and execute our projects in attractive markets, maintaining a solid balance sheet and good financial flexibility. We are focused on delivering value to our shareholders as we optimize all aspects of our business and capitalize on our project pipeline to produce cost-competitive renewable energy at rates of return in line with our targeted returns. Thank you for your attention. We are now ready to take your questions.

Thank you. As a reminder to ask a question on the phone, please press style one and one on your telephone, and wait for your name to be announced. Should we fill your question, please press start one and one again. Once again, please press start one and one on your telephone and wait for your name to be announced. Till later your question, please press style one and one again. If you wish to ask a question via the calls please type them in the question box and click submit. Thank you. We are now going to proceed

with our first question. The questions come from the line of Rupert Mira from National Bank.

Please ask your question.

Hi, good morning everyone. If I can start with your construction activities, you report some higher costs largely at APUET. Can you talk to us about what drove the cost increase there and how are you feeling about the costs on the rest of your pipeline?

I'm sorry Rupert, we missed the first part of your question. Could you please repeat the question?

Yes, you saw some higher costs at APUET in this quarter. I think the costs are mostly in there, but can you talk to us about what drove the cost increases there and how you feel about the cost on the rest of your construction pipeline?

Yes, good morning Rupert, it's Patrick. Essentially, the costs have been driven by difficulty with the BOP supplier contractor which postponed the project during the winter. So we had a higher than expected burn rate with cranes on site during winter and we know we have had a very tough winter in Quebec this year, specifically with deep snow and freezing rain. So that's one point. The second point is on the commissioning part, the finalizing of what we call the mechanical completion on the site and commissioning. We are experiencing some more difficulty or we have been experiencing some more difficulty. No, it's more online. We have put a new kind of framework with the BOREA which is controlling the contractor on site for us to be sure that the right activities are done to finalize this MCC mechanical completion in time. And no, there is nine mechanical completion that have been done. End of next week should be around 14. So we are progressing and looking to that. So this is the main driver of the cost. On the other project, the cost side on the storage and project, it's going very well. This is, this is, this project are well advanced. Everything is on site. All the containers and batteries are already on site. On Tilbury, they are in Canada, but they are, we are finalizing some work on foundations, but no expectation of cost increase. So this is a good project. And on Dénes-Chude, we are working to maintain the cost where they should be. And we're again working with the same contractor in Quebec, BOREA, that has built many sites in Quebec and specifically Seigneurie de Beaupris in the past. So they know the site. So that's the situation. I think, as I mentioned, I think the last quarter, we restart the Quebec wind industry construction and with a project on the North Coast, that creates some difficulty, but we have learned a lot and we have optimized our, the way we're working to take the opportunity of the learnings.

Okay. Excellent. Thank you. And secondly, we saw some legislation in Texas, SB 715, that's proposing backup generation for all renewable projects. How do you see that playing out? And if it does make its way into law, what would be your contingency plans for dealing with that?

Hi Robert, it's Bruno.

So we've, yeah, we've recently seen the, this proposed, this new proposal in the budget of the government and is the industry has started making representations around this to certainly lower the impact. It would start in 2027 and then escalate.

And you're speaking about TSP in Quebec, but I think Rupert was asking about Texas backup on train. Okay. No, we will, the team is looking to this point, but we have to see what would be the impact on our project and come back to you.

Okay. I know it's early and may not get anywhere as it stands in any case, but I thought I'd check in. I'll leave it there then. Thank you.

Thank you.

We are now going to proceed with our next question.

And the questions come from the line of Mark Jovi from CIBC. Please ask your question.

Yeah. Good morning, everyone. Just in terms of some of the advanced stage projects, there was there was a notice in the MD&A about some discontinuations. Can you just give more color terms of what projects those are and what's forcing those projects to essentially discontinue at this point?

The

advanced stage,

yes. I think there was 220 megawatts roughly of advanced stage projects that were discontinued.

Yeah, there is some of these projects where project that the delay to obtain authorization was too long in France. Then we had a difficulty on the lease finalizing. This is what is it, I think, on the lease on one of the days, the project. And then there was a difficulty and a mismatch between the size of the available turbine and the size of the permitted turbine. And so we have to say stop the project because it was not meeting our investment criteria.

Got it. And then maybe, Patrick, you said you're so hopeful that NYSERDA comes out and awards these projects that were bid last year. Obviously, a bit more positive news on the tariffs this week. But just the house bill that came through earlier this week or the proposal, some maybe harder criteria on foreign content, in-service dates, sun setting a bit quicker. Just viability of the solar projects in New York. And how do you think NYSERDA handles some of these changing criteria? Will there be clauses and mechanisms to make developers whole if there's any changes that are negative for companies like yourselves or your partners?

Yeah, it's a good point. Essentially, we are, as I mentioned, waiting for the final announcement from NYSERDA. The project that we bid, and this will definitely depend on when NYSERDA will give or not a green light, but we are in line to be in-service before the due date of when it will start to decrease in 2029, the ITC in the US. So normally we should be safe if NYSERDA is not coming in with a normal delay. So we have also take some action to safe harbor part of the equipment to be sure that if there is any change, we would be protected. And last but not least, the connection we have decided to put the necessary LC, which are not at risk, but which are guaranteeing our position in the queue. So we're working on this and we're working on the procurement of the solar panel within the US. And also we're working on the balance of system contractor. We are presently in RFP for this part of the job to be sure that if NYSERDA come late and award us, we will be ready to start early. So that's how we are playing with that. What I think we should take into account strategically is, and I feel bad for them, but the situation of empire wind will affect the generation in the supply. And so they will have to rely to some other project because the demand is growing there. So certainly we will be well positioned for that.

Would the contract structure have some sort of pass-through mechanism, just depending on what finally comes in terms of tariffs or any sort of higher costs on meeting domestic content requirements?

There is no specific mechanism in the contract that we have seen at the RFP time. That is the only thing I can tell you today. There was no specific mechanism in the contract. Got it. Okay. Thanks for the time today. Thank you.

We are now going to proceed with our next question. The next questions come from the line over Nelson Ng from RBC Capital Markets. Please ask your question.

Great. Thanks. Just a quick follow-up on Mark's question. So Patrick, you mentioned that the solar projects in New York, if selected, would be in service before 2029. And you also have the option of safe harboring. So based on your initial read of the latest legislation, could you essentially just put a lot of deposits down prior to 2029 and safe harbour for the next four years? Is that how you see it? Is that what you meant by safe harbour?

I am specifically saying that for the project that we bid in the 2024 RFP and that we think are very competitive projects, we have taken some risk of safe harboring, essentially equipment transformer that are equipment that are needed in the world of power in the US. So we're not taking a big risk because if there is any big difficulty, we will have someone who will be ready to buy this transformer should we have a difficulty. So that's the point practically and concretely on this project. On other projects in the future that could be bid in the potential RFP of NYSERDA, it's very difficult to comment today because it would really depend on NYSERDA's position on these decrees of the tax credit in the US if and should this go ahead. So there is a lot of if in my point, a lot of conditional, but just to say we're very cautious and prudent on that. But practically, again, if NYSERDA is not too long to award project, we could have competitive project safe and profitable in New York. Just to

add to this point, Nelson is about NYSERDA. I think we are told that an announcement is expected shortly. So it's like imminent. So we never know. It's not in our control. So let's keep this in mind when we are taking about safe our brings.

Okay, thank you. And then next question that just relates to capital allocation, I noticed that you bought back a little bit of stock, I think 24,000 shares in Q2. Can you just talk about your intentions on buybacks going forward? Like was that purchase mainly just opportunistic due to the market volatility or should we expect buybacks to continue?

Thank you, Nelson. The program is in place. We're actively looking at the market changes and as you've seen, we've bought back some shares in April and the program stays in place and we're going to remain active as long as we think our stock price is not at the right level. Thinking about the same time that, as I mentioned last time, our capital allocation is still focused mainly on our growth projects and financing of that. So I think we've sent a strong signal that we believe our stock price is underpriced and we'll continue to buy back opportunistically but also in an organized way and invest in our growth.

We see also a lot of interest right now from many investors. We've had very constructive discussion with a lot of people in the past few weeks so there's definitely a strong appetite for buybacks right now.

From different regions.

Great, thanks. And then just one last question. I'm not sure whether you'll have an update or not I think last quarter you talked about the interest in your hydro assets and the sales process. Do you have any updates in terms of expected timing?

Process is proceeding with high level of interest. That's all we can say at this time. Okay, thanks.

I'll leave it there. Thank you, Nelson.

We are now going to proceed with our next question. And

the next question has come from the line of Robert Hope from Scotia Bank. Please ask your question.

Morning everyone. We recently saw Hydro Quebec relatively do a good pivot to solar for the I guess after 2035. You know how do you think about your capabilities and how do you pivot to capture that opportunity?

Yeah, good morning, Rob. I'm not convinced that for us it would be a good allocation of development capital to develop solar projects in Quebec due to the resource, the different constraints and more the alternative of lots of wind potential in Quebec that will certainly bring a lot of wind lower price at the end for Hydro Quebec. So I think this is my view of the Quebec RFP. There will certainly be interest from other players. It's a little bit different in Southern Ontario where the resource is different, the constraints are different also and the potential alternative in wind are definitely lower. So I think Ontario and New York are the good place and France are the good place for solar for us.

All right, thanks for that. And then maybe just on the battery strategy moving forward, how do you think about where the best opportunities are in the various geographies and how does the UF tariffs layer onto that?

The

tariffs? The battery.

Yeah, yeah, the battery. Essentially we have significant capital deployment presently with Egersville and Tilbury. It was a very well, very unrisked contract because it's, as you a third contract, the same type of 125 megawatt with the Oxford project, the FID, the final investment decision has not yet been taken, but we're making progress on finalizing the work around this and we should be ready to take this decision in the next quarters. And so that's one thing. So lots of opportunity in Ontario specifically. And the other market where we're seeing opportunity somewhere on a smaller scale for each project, but on a very big scale as a market is the UK. The UK is an island, Great Britain is an island, but it's also electrically an island. So there is a lot of need of frequency response mechanism and load management. And so there is lots of opportunity. The type of contracts are different. So we have not yet taken any final investment decision, but this is also something interesting because the size of the market today, I think there is five gigawatt installed capacity in the UK already in storage and they're planning in the next five years to go to 25 gigawatts. So lots of opportunity in the UK. So now we have to be sure that the business plan is, is the risk reward of the business plan there will be acceptable for Baralex.

And I would add in Canada, the additional benefit is the ITC, which we expect will remain in place. Just

also that, you know, we are preparing ourselves for the upcoming bid in Ontario. So in December there's a capacity bid. There's two bids coming like one for, sorry, one for

energy and one for storage. And we're preparing for both different projects. That is called LT2. Excellent.

Thank you.

We are now going to proceed with our next question. And the questions come from the line of Benjamin from

BMO. Please ask your question.

Hey, thanks. Good morning. You mentioned some of the cost overruns that you're experiencing at Appleette. And I'm wondering, we're seeing some of these Ontario storage projects tracking perhaps below budget costs. Are you seeing that at all in your projects or that already built into your initial cost estimates?

Are you referring

to other projects showing lower costs? Is that what you're referring to? Yeah,

I don't like to talk about it specifically, but we saw Northland's Unator project come in 100 million below budget one day commission. Are you seeing any similar trends in your storage projects in Ontario or you've already factored that in? I'll just track into

it. Okay, that's clear. Thank you, Ben. What is clear is it's a different situation. If you look with some high level, look, the cost of battery and the technology are improving quickly and the costs are going down. So that's one thing that we experienced in the past a lot in wind. We're still experiencing that in solar. And so battery and solar are somewhere similar. And so the point is, and the cost of lithium has also gone down between the RFP assumptions and the procurement on our side. So there is improvement on this. We have taken our investment decision a little bit after Oneida, I think one year after we will be delayed. At the end, the delay would be six months because we have taken some risk on ordering a transformer and circuit breaker earlier. But to come back to your point, I think if the technology is continuing to improve and the way battery are produced, and if there is not too much reshoring pressure, the cost will continue to go down and there will be room for improvement. I'm not sure that it's still possible in wind today because of the size of the turbine and the constraint of transportation of blades. Okay, thanks,

Fred. Could you also talk about the process with the hydro assets, what you've learned so far, at which stage in the process and the timeline going forward?

Ben, as I mentioned, we're going to the process right now and we have strong level of interest. We're not sharing more information due to the competitive process. Okay,

got it. The last one, in Canada specifically, you mentioned Quebec and Ontario. I don't think you mentioned BC at all. There's been some positive news on permitting and focus on clean energy and all of that. Is that a market that you're thinking about a bit more these days or is there still Ontario and Quebec is the focus?

Yeah, I would say Ontario and Quebec are the focus, but we have some development in BC, but it's not advanced like in Ontario and Quebec.

All right, okay, thank you very much. Thank you.

We are now going to proceed with our next question. The next question has come from the line of Sean Stewart from TD Cowan. Please ask your question.

Thank you. Good morning. Just one follow-up question. The 2.2 gigawatt advanced stage pipeline, I think we have a pretty good sense of where you stand with respect to New York. I guess my question is with respect to the UK piece of this, can you give us a sense of what you're expecting to submit to the AR7 process and timeline for advancing that? If you can give us a sense of what the return differential spread looks like between these advanced stage opportunities, moving them up into the ready to build segment of your development pipeline.

Yeah, on the return side, I would say that we have an investment guide, which is precise on the level of return we are asking depending on the type of contract, the duration of contract, the technology and the jurisdiction where we're developing. So this is not changing. This has been increased as you remember. We are seeing between 10 to 12 percent. I will not say in which jurisdiction and which technology it's standing in, which jurisdiction and which technology it's 12 or over. But definitely what I can say is that in the UK, the good news is we're working on a handful of projects to be bid in the next AR7. We don't know yet the budget of the AR7 and exactly what will be the exact rules. But if we copy paste what was AR6, we will have a chance to bid a handful of projects. And when we have different projects, as we are doing in France for the last many years and we have done in New York, we have a strategy of some must-win projects, some -to-wins projects and some very -to-win projects with a kind of ladder of the different return that we're putting there. And we're taking into account the fact that some projects are on the critical path to be built or some projects have

room

due to grid connection for example to be rebid the year after. So we're a little bit more aggressive on the return expectations there. So that's a lot of the strategy we are taking on these projects.

Got it. Okay, that's all I have. The rest of my questions have been answered. Thanks very much. Thank you, Sean.

Thank

you.

We are now going to proceed with our next question. And the next questions come from the line of Nicola Bojcik from Comac Securities. Please ask your question.

Thanks. Good morning, gentlemen. On the supply chain, you commented all on the availability of the timelines that your vendors are providing you as you're having these conversations to pre-purchase solar panels and to prepare for that for turbines. Are you seeing availability costs increase materially?

Essentially what is I think on the main equipment, battery, wind turbine and solar panel, it's not there that there is the more pressure presently in the market where we are seeing difficulty. It's more transformer, circuit breaker, bushings and all those things which are due to lots of investment all over the world in HV or very high HV transmission system. So that's where we are really looking and working with suppliers. Sometimes the purchasing team or the execution team is coming to say we have a big alert there and they solve it in one week. So we have many alerts over the last month, but so far touching wood, we have solved all of them. So that's where is the constraint today.

Okay, I understand. Thank you. And then on the main components, so like we'll use solar panels as an example, are you seeing an increased demand for domestic or at least North American or Western European produced material versus something coming out of Southeast Asia?

Yeah, we're seeing this trend in the US definitely and we have work specifically for the NYSERDA project we are working for with a local domestic supply chain. So that is something. On battery, I had a meeting some weeks ago with a big Chinese company which is specifically investing in the US to produce batteries there at a very competitive cost. So I think things are moving in this direction and I'm not convinced it definitely to very, very higher cost. There is the time for the market to adjust, but yes, it's moving. The situation in Europe is completely different because there is less limitation to Chinese goods today in Europe. So the price of solar panel, for example, are almost one third of what it is in the US per watt, which is a little bit crazy situation, but that is the situation. Okay, excellent. Thank you.

Thank you.

We have no further questions on the phone line at the moment, so

I'll hand back to you for any webcast questions that you may have. Thank you. Thanks everyone for your attention. As

part of our strategic trans presentation, a site visit scheduled on May 16th in Hagersville, Ontario, where Alex is pursuing the construction of a 300 megawatt battery storage project. The investor day will take place on May 17th at Lumi's Toronto offices and will also be streamed live for remote participants. An official invitation will be distributed via the press wire tomorrow. Should you need more information on this event, please contact me or Stefan Milo. Our next conference call to announce second quarter results will be on Friday, August 8th, 2025 at 11 a.m. Have a nice day everyone.

This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.