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spk01: Welcome to the Northland Power Conference call to discuss the annual and fourth quarter 2023 results. At this time, all participants are in a listen only mode. After the speaker's presentation, there'll be a question and answer session. To ask a question during the session, you'll need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. As a reminder, this conference is being recorded on Thursday, February 22nd, 2024 at 10 a.m. Eastern Standard Time. Conducting this call for Northland Power are Mike Crawley, President and Chief Executive Officer, Adam Beaumont, Interim Chief Financial Officer, and also joining us for the call this morning for the question and answer portion will be Daria Neymar-Leah, Vice President and Investor Relations. Before we begin, Northland's management has asked me to remind listeners that all figures presented are in Canadian dollars and to caution that certain information presented and responses to questions may contain forward-looking statements, which include assumptions that are subject to various risk. Actual results may differ materially from management's expected or forecasted results. Please read the following forward-looking statements section in yesterday's news press release announcing Northland Power results and be guided by its contents and making investment decisions or recommendations. The release is available at .northlandpower.com. I will now turn the call over to Mike Crawley.
spk04: Thank you very much and good morning, everyone, and welcome to Northland's fourth quarter earnings call. I wanna begin our call by emphasizing Northland's commitment to health and safety. In 2024, construction of Heilong, Baltic Power, and Oneida projects continues forward, ensuring a strong health and safety culture on those sites remains paramount to us. This is particularly important for the Heilong offshore wind project where in-water construction really ramps up later in the spring. So looking back on 2023, I am so impressed with the resilience of our employees and really proud of all that they accomplished. And as you know, I've got Adam Beaumont here, who headed up the capital markets in 2023 for Northland. He's got a new role now. I'll tell you, it's in... Everybody looks great when you've got a good market and when things are going well, but when you hit some headwinds, you really see the capabilities of your team and the character of your team. And the whole team accomplished a lot in 2023, but a lot of that was through the leadership of Adam heading up capital markets and all of our financing activities through the year. So the strong performance of our facilities and delivering every targeted transaction allowed us to meet guidance for adjusted EBITDA and exceed guidance for both adjusted free cash flow and free cash flow in 2023. This was primarily due to high availability levels maintained across our operating fleet that allowed us to capture the full benefit of the wind and solar resource there. And in particular, the closing of the Gentire partnership at the end of the December was very important. Today, we look forward to sharing with you the construction progress on Oneida, Heilong and Baltic Power projects, as well as our 2024 financial guidance. However, we wanted to highlight, we also plan to provide more detail at our upcoming investor day on March 5th. In terms of financing activity, it has been a momentous year for Northland with approximately 15 billion in total project and corporate financing secured. It was also the first year of executing partnerships for our offshore wind projects, which has been a big part of our strategy for some time. Indeed, our focus on forging strong partnerships like with Mitsui and Orlin has been a key factor in our success, especially in challenging market conditions. Orlin, for example, has been instrumental in our Baltic Power project, leveraging their local expertise and securing a one of its kind or first of its kind PPA in Poland. Mitsui played a critical role on the Heilong project financing. So looking ahead, we will continue to focus on asset level partnerships and capital recycling. This strategy not only allows us to de-risk our investments, but also enables us to reinvest in new attractive opportunities. By sharing development and capital costs with our partners, we accelerate project development, we diversify our opportunity set, and with the right partners, we enhance our projects. Looking at the headline numbers, we delivered an adjusted EBITDA of $389 million in the fourth quarter, an increase compared to $353 million at the same time one year ago. This led our full year adjusted EBITDA in 2023 to be within guidance at $1.24 billion, which was lower than $1.4 billion in 2022, primarily due to the abnormally high European energy market prices last year. For adjusted free cash flow per share and free cash flow per share, we achieved 75 cents for both in the quarter compared to 16 cents and six cents respectively during the same period a year earlier. On a full year basis, we delivered adjusted free cash flow of $1.97 per share and free cash flow per share of $1.68. Adam will provide a more detailed look into the financial numbers later in the call, as well as details for our 2024 financial guidance. At this time, I'd like to provide you with more details on our key achievements in 2023. During the year, we completed financial close of our two major offshore wind projects, Heilong in Taiwan and Baltic Power in Poland. In addition, we completed financial close of the Oneida Battery Storage Facility in Ontario. In total, this resulted in Northland, along with our partners, securing approximately $11 billion of non-recourse debt financing across all three of those projects. This represents 2.4 gigawatts of gross capacity that is now under construction or approximately one gigawatt net to Northland. We also issued our first green corporate hybrid bond in June and in December, we up-financed EPSA's credit facility and separately re-profiled the Spain portfolio project debt payments to align with the expected future cash flow profiles on those assets. As I said earlier, 2023 was the first year that we closed several new partnerships as part of a strategy that we set out a couple of years ago, including seeing selling down a .5% stake in our early stage offshore wind ScotWind project in Scotland to ESB, a leading Irish utility. We sold down a 49% stake of our early stage projects in Taiwan to Gentauri and lastly, and most significantly, we sold down or closed a 49% sell down of a stake in Heilong to our partner Gentauri for equity commitments of approximately $1 billion. In addition to all of this, we reached commercial operations for our 220 megawatt New York wind projects and 130 megawatt solar projects in Mexico. These facilities are now generating cash flow and in the case of the New York projects, under a 20 year government backed PPA. So looking ahead, our priority and our focus are to deliver Oneida, Heilong and Baltic Power projects on time and on budget. All three projects continue to advance their construction activities as per schedule with certain work streams tracking ahead of schedule. On Heilong, fabrication of foundations, cables and substations both onshore and offshore are moving forward. We're also laying the groundwork for in water construction set to commence in the spring, ensuring that we're gonna be on track for all our project milestones. On Baltic Power, early construction activities continued throughout the fall with the fabrication of critical components such as the onshore substation, foundations and export cables already underway. And lastly, on the Oneida battery storage project, fabrication of essential components like battery packs and transformers alongside the pouring of concrete foundation pads has begun keeping our construction on that project on track. We look forward to providing more detailed updates on all three of these projects at Investor Day on March 5th. I would now like to turn our attention to some positive industry tailwinds that we've been observing over the past few months. The global demand for renewable energy has been stronger than ever. Global climate change targets remained strong and even stronger than what we have seen before showcasing government support for renewables. Commodity prices are declining, inflation and rising interest rates have slowed and are receding and multiple new large projects have announced their intent to move forward. Power market prices have been increasing, notably as we saw recent auction results in the UK and the US principally in New York State. We're also seeing strong demand driven by AI and data centers which represent potentially trillions of dollars in new investments for the tech industry. Such investments will require a huge amount of power. Currently data centers, AI and cryptocurrencies, mining consume 480 terawatt hours of demand approximately and about two, which is about 2% of global energy consumption driven by the high power requirements for that computing and cooling of the data centers. By 2026, the International Energy Agency in Paris estimates this sector of demand could top 1000 terawatt hours. It's just two years from now. More than doubling from current levels. This equates to roughly the current electricity consumption of all of Japan. AI and data center demand anticipated by the International Energy Agency in their base case scenario is to grow by 12% Cagar approximately with overall electricity growth typically closer to 2%. This segment of consumption is typically served by renewable electricity representing a growing opportunity for IPPs like Northland as major technology companies have significant decarbonization pledges. We are excited about the future for renewable energy and have a sizable development pipeline that will position us to capitalize on these positive industry trends. As part of our financial outlook that Adam will discuss today, we plan to allocate $16 million towards development activities this year. However, we will be selectively deploying our development capital in markets and technologies where we can leverage our competitive advantage, our experience and our capabilities. Following our outlook guidance that was published yesterday, Northland will be advancing onshore opportunities within Alberta, Ontario, New York, and we will continue to develop offshore opportunities in Scotland and South Korea in relation to our existing early stage projects in those markets. The focus will mean that we will no longer pursue any new development work in Mexico or Columbia while we look to double down our growth in a narrow set of markets. Northland remains disciplined by only pursuing projects that meet our investment criteria and create shareholder value. This means not being shy to exit opportunities that don't meet that objective. An example of this in 2023 was our strategic exit from the Nord Sea Cluster wind projects in Germany, achieving a modest premium on our way out of those projects over our investment costs. While these decisions are not easy, they demonstrate Northland's financial discipline and reflect our promise to shareholders. With the now 12 gigawatt development pipeline, we feel confident in our own growth ambitions while having the flexibility to be selective and pivot pending on market conditions and it enables our asset recycling strategy which we will speak to in greater detail at our investor day. Overall, it was a very productive year for Northland where we delivered our objectives and have set up a strong springboard for 2024. I would like to thank all of our employees and partners who have been an integral part of Northland's success. At this time, I would like to in particular take the opportunity to separately thank Pauline Allen-Cendani and David Pawl for their outstanding leadership during their dedicated years of service at Northland. They've both been a critical part of our leadership team over the last several years. Now as Northland embarks on the critical construction phase of our three major projects, this presents an opportunity to bring in new leaders that bring in fresh perspective, expertise, and vision to support our current focus on execution while also looking ahead to further growth down the road. With the ongoing comprehensive global search for a new CFO, considering internal and external candidates, we are fortunate to have Adam Beaumont lead us through this transition. Now many of you know Adam quite well. He's been with Northland for over 13 years where he's contributed to our remarkable evolution. His deep understanding of our business and culture has been instrumental in our journey. Experience, combined with his strong relationship with Northland and across the financial industry, positions him perfectly to lead us through this transition. We're also excited to have Toby Edmonds join us as the new Executive Vice President of the offshore wind business unit. Toby brings a wealth of offshore wind execution, operations, and joint venture management experience, which the catalysts for our offshore wind business going forward. Prior to his most recent role as Chief Operating Officer of Maple Power, Toby spent more than a decade at RWE, large majority of which he spent as a project director for two large offshore wind projects in the UK. His previous experience in both offshore wind project execution and executive leadership gives him the unique skillset to lead us through this new chapter of our offshore wind business. So with that, I will now turn the call over to Adam for a detailed review of our financial results.
spk03: Thank you, Mike, and good morning, everyone. Before we dive into the specifics of the quarter and the year behind us, I would like to echo Mike's comments and share my thanks and appreciation for Pauline's leadership and support over the last four years. She had a huge impact on our organization, and we wish her well in her next adventure. As Mike alluded to, it was a successful year and a strong quarter to close off 2023 for Northland. In total, we executed approximately $15 billion of corporate and project financings. This included closing the Gentaria Partnership late in the quarter, where we used the proceeds from the transaction to repay our short-term bridge facility and will fund our remaining equity in the project. Gentaria will now also contribute its share of the equity along with us until first draw is met, which is expected shortly. In December, we completed three other financings, including securing final tax equity for approximately $300 million for our two onshore wind projects in New York, Bluestone, and Ball Hill. We completed an optimization of our Spanish portfolio's debt facility, which helped us to right-size the debt profile and better respond to fluctuations in the local power prices following the change in the regulatory framework over the summer. And finally, we completed an up-financing of the IBSA debt facility. The up-financing is consistent with our investment thesis of annual up-financings driven by the growth and strong performance of the IBSA business. We have hedges in place to protect the Canadian dollar denominated debt balance against changes in the Colombian peso. And due to the appreciation of the peso over the last year, the proceeds of the up-financing were used to settle our FX hedge and provide Northland with a $44 million cash distribution. Moving on to our operating and financial results released last night for the fourth quarter and full year. Our financial performance was solid. We met full year guidance of adjusted EBITDA and exceeded our guidance of adjusted free cash flow and free cash flow per share. This was a result of the strong performance across our offshore wind portfolio and sell-down gains realized over the year. We achieved full year adjusted EBITDA of $1.2 billion, representing a decrease of 11% compared to 2022, which was primarily attributed to lower contributions from the offshore wind portfolio due to the spike in market power prices realized in 2022, a higher level of development in GNA administrative costs, decrease in the contribution from the Spanish portfolio, primarily due to lower power prices noted during our last earnings call, and this decline was offset by gains from development asset sell-downs executed during 2023. As Mike noted, Northland has been planning for sell-downs as part of our funding and partnership strategy for a few years. However, it was this past year where we really seized the opportunity to close some important partnership transactions and also exit a project where the returns no longer met our economic requirements. We will continue to review strategic partnership and asset recycling opportunities going forward, as Mike said, as well as maintaining a disciplined look on our growth projects that we pursue going forward. With respect to our adjusted free cash flow and free cash flow, Northland generated $498 million and $424 million in the year, respectively. This compares to $461 million and $380 million in the same period last year. The factors contributing to this 8% increase in adjusted free cash flow were a decrease in scheduled debt repayments at our operating projects, and in 2022, as a result of the higher power prices, we made some one-time principal repayments as part of our loan restructurings at our Spain and Gemini facilities. A decrease in current taxes, primarily attributed to our on offshore wind and Spanish facilities driving lower operating results in 2023, and gains from offshore wind development asset sell-downs and resulting gains from FX hedge settlements. These increases were partially offset by the decrease in the contribution from our operating facilities, decreased due to higher net proceeds from the EBSA refinancing recognized in 2022, and net proceeds from the sale of two gas assets in April 2022. On a per share basis, these figures translated into adjusted free cash flow of $1.97 and free cash flow of $1.68 in the year, compared to adjusted free cash flow of $1.95 and free cash flow of $1.61 per share last year. These results generated an adjusted free cash flow and free cash flow net payout ratios of 61% and 71% respectively, calculated on a basis of cash dividends paid, compared to 61% and 74% for the same period last year. With respect to our balance sheet, as of December 31st, 2023, Northland had approximately $600 million of cash and liquidity, comprising funds available from our revolving facility and corporate cash
spk04: on hand.
spk03: To reiterate, our construction program is fully funded after the closing of the high long sell-down to Gentire. We continue to prudently manage our balance sheet and will continue to look for opportunities to bolster our corporate liquidity and enhance our cash flow. Turning to our financial guidance for 2024, we expect adjusted EBITDA to be in the range of $1.2 to $1.3 billion compared to $1.24 billion in 2023. The key offsetting factors include higher contributions from a full year of operations from our New York onshore wind projects, as well as higher contributions due to the normalization of production for our off and onshore, other off and onshore renewable assets. Lower development costs as a result of focusing on the execution of our construction projects, which is offset by the non-recurrence of sell-down gains in 2023 from our offshore wind assets. For 2024 free cash flow per share guidance, we expect to be in the range of $1.30 to $1.50 per share, while for free cash flow, we expect to generate $1.10 to $1.30 per share. When compared to 2023 results, key factors contributing to the decrease in adjusted free cash flow and free cash flow per share are lower sell-down gains, which are not factored into our guidance forecast, lower settlement gains that were experienced in 2023, lower contribution from HBSA as a result of higher up-financing proceeds in 2023, offset by higher contributions from a full year of operations at our New York onshore wind projects and the return to normalized production for the remainder of our renewable assets. Additionally, free cash flow will be approximately $60 million of DevEx, as Mike said. Compared to prior years, the development costs, because we are focusing on the construction of our activities and have to prioritize certain markets, as Mike explained, our costs are lower. Corporate G&A costs are expected to be $75 million in 2024, which would be a reasonable run rate to assume going forward. As previously noted, our disclosed guidance ranges for adjusted free cash flow and free cash flow do not assume any sell-down proceeds. As such, net sell-down proceeds will be reported in our nine IFRS measures only when they occur. It would be noted our payout ratio will remain elevated by design, largely reflecting the level of spending on growth initiatives and projects under construction until 2027, when they are expected to be fully operational. This, although a larger construction pipeline, is a similar situation to when Northland successfully executed on our construction program of three European offshore wind projects approximately 10 years ago. Once the projects under construction are fully completed, they are expected to deliver on an annual basis $570 to $615 million of adjusted EBITDA, $185 to $210 million of adjusted free cash flow by 2027. This will provide a meaningful cash flow amount for our business, and with the 20 to 30 year revenue contracts will extend the contracted cash flow profile for Northland. In addition, I wanted to note the results released last night include an impairment of goodwill for our Spain portfolio. The portfolio continues to have regulated returns and perform above our investment expectations. However, as a result of the higher cash flows received since its acquisition due to the higher power prices, the regulated cash flows going forward over the life, over the regulated life will be lower. This and higher discount rates diminished the fair value of the portfolio, which led to the impairment of goodwill. To conclude, it has been a solid quarter and a resilient year for Northland, with the risking completing financings for our construction projects, several sell-down transactions, and streamlining and simplifying our growth focus. We surpassed our guidance and are proud of our accomplishments we achieved and continue to look forward to deliver on our objectives for 2024. I will now turn the call back over to Mike for concluding remarks.
spk04: Thank you, Adam. So to say it one last time, 2023 was a really busy year for Northland and we accomplished a lot and most importantly, we were able to lock down and fund a large amount of growth, which as Adam laid out for you, will deliver a significant amount of additional EBITDA and free cash flow by 2027. We have no further requirements to tap equity or debt markets, any additional growth would be purely discretionary. And so 2024 is gonna be a lot about executing on those projects and ensuring that they come in, as I said earlier, on time and on budget. I know that our offshore wind project directors, Yens and Tim and the head of our onshore business unit, Michelle Chislett are looking forward to telling you more about these projects at our investor day on March 5th. So this concludes our prepared remarks and we'd now be happy to take your questions. Please open the lines.
spk01: Thank you. As a reminder, to ask a question, you'll need to press star one one on your telephone. To withdraw your question, please press star one one again. Please wait for your name to be announced. Please stand by while we compile the Q&A roster. One moment for our first question, please. Our first question comes from the line of Sean Stewart with PD Securities. Your line is now open.
spk06: Thanks, good morning, everyone. Couple of questions. Mike, hoping you can give some visibility on opportunities to advance perspective onshore developments to backfill the development pipeline. I gather this would be more of a 2025 and beyond set of initiatives, but what you see is the most transparent opportunities on that front and your comfort that current and pro forma available liquidity will be adequate to fund the equity investments for those opportunities.
spk04: Yeah, so you're right in saying that in terms of FIDs or financial closes or NTPs on those projects, it would be a 2025 story, latter half of 2025 and into 2026, but where we have presence right now is in Alberta, Ontario, New York, and I'll talk about Spain in a sec, but those are the three main markets where we have presence and where we're looking to grow. In both New York and Alberta, we've got a portfolio of early, mid, even later stage development projects that we would be able to either secure corporate PPAs for or bid into centralized auctions to secure revenue contracts. As you know, in Alberta, the majority of our portfolio was unaffected by the moratorium, which I think the Alberta government's signal is being lifted in any event, but we have some flexibility about when we move forward with those solar projects in Alberta, and there's also some battery storage projects that we think are interesting in that province too. Flipping to New York state, we have mostly a solar portfolio in that state that our team on the ground has been developing over the last few years, but we also have one wind project as well that we may move forward with in that state as well, and that state, as you know, Sean, is its annual NYSERDA options is a mechanism to secure revenue contracts there. We would be, as I said, looking to not move forward with any new investments until later in 2025. 2024 is really about executing on the projects that we have in front of us, and there's been no decision or no view taken yet on how we would fund those projects, whether it's with partner capital, with our own organically generated funds or by some other means. So we'll give certainly more detail as 2024 progresses on that, but that's kind of where we're at right now. Spain, we've got a significant operating fleet, about 550 megawatts, mostly wind, which is good in that market versus solar at this point in time, and so we see opportunities perhaps to add more generation capacity to some of those interconnects, but early days on that, and we would like to do more in Spain, but the team still has to scope out what that opportunity could look like.
spk06: Thanks for that detail, Mike. Second question, and maybe you don't want to say too much ahead of the investor day, but you're ceasing development activity in a few markets that you noted, including Colombia. Any comments on, I guess, plans for asset sales, whether it's EBSA or other assets, and presumably there's no urgency in weighing the decision to sell off assets versus valuation considerations. How do you think about that tension when you think about rationalizing assets?
spk04: For sure, in terms of capital recycling, we are always looking at a number of different opportunities. So just because we're looking at a particular opportunity doesn't necessarily mean we're gonna move on it, right? And from our standpoint, particularly in the current market conditions, optionality is important. So we wanna make sure that we have as many options available to us so that we don't end up feeling like we have to move on an unattractive opportunity, which we would not. So we would only look at sell down or any divestment if the economics were attractive to Northland.
spk06: Okay, thanks very much for that detail. I'll get back in the queue. Thanks, John.
spk01: Thank you. Our next question comes from the line of Nelson Ng with RBC Capital Markets. Your line is now open.
spk05: Great, thanks, and good morning, everyone. Quick question on, I guess, your more focused development target. So you've stopped development activities in Mexico, Colombia, and Japan. Are you taking any, have you taken any charges or any impairments? And was any of that, so have you taken any in Q4 or do you expect to take some charges going forward? No. Go ahead, Adam.
spk03: Yeah, no, we did take a charge last year, sorry, in 2023 related to the Columbia projects, but that was it.
spk05: Okay, great. And then just on asset sell downs, is there anything you can say in, so I think you're looking at whether it's outright sell downs or selling down minority stake, and you've been pretty active last year. Is there anything you can say about a potential transaction in Spain?
spk04: No, I mean, other than what we said already is that we're always looking at different options, but nothing to say beyond that.
spk05: Okay, got it. And then just on your guidance for 2024, I guess, other than just general changes in generation being above or below the long-term average, in terms of what could push you above or below your guidance range, would that mainly be potentially recognizing gains on sell downs or refinancings and things like that? Do you see any other, or any factors that could really move your results this year other than generation?
spk03: No, Nelson, I think you hit it right on. It's no different than the past. Obviously, we have the production variability, but those other two items, as you alluded to, we don't guide to anything on the sell down side, so that would be it.
spk05: Okay, and then just one last question. In New York, I guess NYSERDA had their expedited process. Did you submit any Winder solar projects into that bid last month? Yes. Okay, so I guess we'll hear in a few months whether you guys are successful. I'll leave it there, thanks everyone.
spk01: Thank you. One moment for our next question, please. Our next question comes from the line of Rupert Mirror with National Bank. Your line is now open.
spk02: Hi, good morning everyone.
spk04: Hi,
spk02: Rupert. So you are potentially looking at some more sell downs than you highlighted. You want to maintain optionality. Does that include optionality with respect to potential acquisitions? Are you active in the M&A market, and is there potential you could find something of interest which could be aligned with your strategy in the future?
spk04: Certainly in the near term, the answer would be no. In the longer term, depending on what we do with capital recycling, if there's a use of proceeds coming out of that, then there may be an opportunity. And certainly there are some better opportunities in certain markets now than there maybe would have been two or three years ago. So, but I'll leave it at that.
spk02: Great, and then secondly, more of a question on your long-term outlook. But if we look at the offshore assets that you have in the North Sea, you do have one coming off contract, of course, the North Sea, 2027, I believe. How are you seeing developments in the off-take market there? And where do you think will be the opportunity for refinancing? And re-contracting that asset? How's that evolving?
spk04: Well, it's been an active market. So you probably have seen a number of off-takes from onshore and offshore projects announced over the last couple of months, two or three months in Europe, Northern Europe in particular. So we've kind of disclosed that we would begin working on securing an off-take for North Sea One. It doesn't come off until 2027, but we wanted to get going, I guess, early on it and see what the market conditions are like, and that's kind of where we're at right now. But the other thing that we've done too, Rupert, is we've got a team that we're reforming internally to start looking at all of our facilities and becoming, I guess, more proactive in terms of both re-contracting, re-powering, but also looking at optimization opportunities in all of them. I mean, the first opportunity we want to go after in terms of growing free cash flow is how to get more out of our existing facilities.
spk02: All right, very good. I'll leave it there and look forward to March 5th.
spk01: Okay. Thank you. One moment for our next question, please. Our next question comes from the line of Ben Pham with BMO. Your line is now open.
spk08: Hi, thanks. Good morning. Maybe go back to your payout ratio and the guidance for this year, free cash flow, 100%. I know you mentioned the commitment to the dividend. Can you comment, since this is the first year of this big build cycle, I would think that the payout ratio will get more stressed over time. Is that true, and how high can a payout ratio get to?
spk03: Yeah, so Ben, I think, like no different than when we did the offshore wind projects, like it will be, we will have elevated because we've deployed the equity into those investments and the projects will start to come online. And again, we'll give some more color at Investor Day, but obviously there are events that are happening between now and when all three projects are online in 2027. For example, NIDA coming online in 2025. So I would say, we're not gonna guide beyond any further than we have at this point, but you can see the signals to things improving once all three are operational by 2027.
spk08: Okay, got it. Maybe a related question. You've seen when your peers have a dividend, or they're dividend quite a bit, and you're highlighting a 30 to 50% payout, and that's similar to another peer in your sector. I'm wondering, and I mean, their thesis is there's a lot of growth and the payout ratio is ideal. Why is that so different than Northland Power, than just their philosophy on cap allocation versus your current payout ratio?
spk04: Maybe I'll say a couple of words and turn it to Adam. I mean, one of the differences is what we talked about or in the call is what we did in 2023. So we in 2023 secured all of the capital for three significant projects that are gonna deliver roughly 600 million EBITDA, 200 million incremental free cashflow in 2027. So we've gone out and secured those investments. We're well underway in terms of constructing those projects. So that's kind of, there's no additional CapEx to put into those, there's no additional CapEx to put into that, it's already done. And we're now, we're executing on it and we will deliver the cashflow as described. So that's number one. And so maybe we may be at a different point in terms of our development cycle than some other peers, which I think is positive for Northland. The second thing is with respect to kind of the, looking back at Gemini and North Sea One, those are two large projects. Certainly Heilong and Baltic are two very significant projects, but we are also a larger company than we were 10 years ago. So we're able to still invest in growth, as Adam said, $60 million in development to make sure that the company will have additional investment opportunities as those projects come online so that we can deliver further free cashflow growth, further EBITDA growth after those three projects come online so that we really can put ourselves on a really positive growth trajectory going forward too. So it's always balancing off between how much we put into DevEx versus making sure we maintain a payout ratio at a reasonable level and it will fluctuate up and down. But I think we're in a strong enough position not to have to do what our, I know we're in a strong enough position not to do what some of our peers have done.
spk03: Yeah, nothing to add from what makes sense.
spk08: Okay, thank you very much.
spk01: Thank you. One moment for our next question, please. Our next question comes from the line of Mark Jarvey with CIBC. The line is now open.
spk09: Thanks, good morning everyone. Just wonder if you guys can clarify the capital spent to date on High Long and Baltic Power and whether or not you're tracking the numbers you outlined in the presentation this fall. I think it was looking to do about 28% of the capex at Baltic Power, 22% on High Long.
spk03: Yeah, Mark, so we can get, we're gonna give some more numbers as part of our investor day, but I would say that the numbers that we had out there are generally correct. There was some timing probably that will cause that to be slightly different, but for the most part they're in line.
spk09: And the timing was either moving faster or slower?
spk03: In different circumstances for each project, yeah.
spk09: Okay, anything since the last update in terms of, can you take up new challenges or anything else in terms of timelines or progress in terms of any of the on-shore fabrication work to date?
spk04: No, I mean, overall, as we said in the opening remarks, that the projects are all free on schedule and trending on budget. So yeah, overall we're feeling good about the state that the projects are at right now. And of course the two project directors and Michelle will give a bit more detail on them on March 5th.
spk09: Okay, and then, wasn't maybe the update in terms of partnerships in South Korea, is that something where you maybe bring in early stage partners, is that something that could happen in 2024, and what would a partner need to see before they would step in to shoulder some of the DevEx work on those projects?
spk04: Yeah, so I think there's different options for partners in the Korean portfolio, a strategic kind of partner or a local partner, maybe both. I think they would wanna understand the relative competitiveness of the sites that we have. Obviously that includes kind of the cost to build of those sites and of course construction risk, which is exactly how we look at those projects as well, to understand that better. So the projects are still at a relatively early stage. So TBD, how those partnership discussions develop over 2024, but we'll obviously keep the market informed if there's anything to announce.
spk09: So if it's around relative economics, Mike, if you do sign a partnership, should we do that as a sort of external validation of the potential viability of those projects and the return potential?
spk04: I would, yeah, I think that's exactly right. There's a significant portfolio of somebody to be a good partner for us. We'd want a partner who actually is gonna add value and they would be applying some pretty rigorous diligence to those projects.
spk09: Great, okay, you on the fifth, thanks everyone.
spk01: Thank you, one moment for our next question. Our next question comes from the line of Nick Boichuk with Cormart Securities, your line is now open.
spk07: Thanks, good morning guys. In Heilong, there was a report that I saw last week that the 640 megawatt Yinlin project needs to have its first two turbines removed after some sea floor pile run issues. I'm just wondering if you guys can comment at all on the work that you've done in the region and why you have so much confidence, again, on this going off without a hitch, development timelines being met, no issues with CAPEX, and any extra color there would be helpful.
spk04: So our Heilong is in a different part of the Taiwan Strait, so different seabed conditions, number one, number two. Heilong is one of the last, not the last, of those initial projects that were awarded to Taiwan to go into construction. Yinlin, I think, was the first, or at least one of the first to go, so there's several years in between notice to proceed on Heilong versus Yinlin, and that allowed us to do, not just a lot more geotech, geophys, in other words, seabed mapping and boreholes than the Yinlin project did. We did more on Heilong than we did on any of our projects that we built in the North Sea. So we've got a strong level of confidence in terms of the seabed conditions, and it is, as I said, in a different location of the Taiwan Strait. We've also got a much longer construction period, deliberately, to make sure that we allow buffers in the schedule and that the construction process is not rushed.
spk07: Okay, that's great, thanks. And then I'm not asking about more growth here with this one, Mike, but in Poland, I'm curious, we've spoken before, I think it was at the last Investor Day about the value of having Orlin, and then you brought it up again today. I'm curious if having partnerships like that is leading to maybe more tangible near-term opportunities that you maybe otherwise wouldn't have had an opportunity to look at. I'm just curious if that's kind of becoming a new source of opportunities for you guys.
spk04: We would like to think so. I mean, we like to think that we're a good partner, and I think we've been very happy with the partnerships that we've had with Mitsui, with Orlin, and so we would like to do more. ESB's been a great partner on the ScotWind project, so we would like to do more with those partners, and also seek out new partners that are similarly, with similar strengths to bring. So yeah, we hope that that can lead to more.
spk00: Okay,
spk01: thank you. Thank you. I'm currently showing no further questions at this time. I would like to hand the conference back over to Mr. Mike Crawley for closing remarks.
spk04: Okay, well, thank you to everybody for joining us today. We're gonna hold our Investor Day, as I've said a few times on March 5th, and our next earnings call will follow the release of our first quarter 2024 results in May. In the meantime, thank you for your continued confidence and support.
spk01: This concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.
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