Northland Power Inc.

As a reminder, this conference is being recorded on Wednesday, May 14, 2025, at 10 a.m. Eastern. Conducting this call for Northland Power are Christine Healy, President and CEO, Jeff Hart, Chief Financial Officer, and Adam Beaumont, Senior Vice President of Capital Markets. 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 that include assumptions and are subject to various risks. Actual results may differ materially from management's expected or forecasted results. Please read the forward-looking statements section in yesterday's news release announcing Northland Power's results and be guided by its contents when making investment decisions or recommendations. The release is available at www.northlandpower.com. I will now turn the call over to Ms. Christine Healy.

Thank you very much. Hello, everyone. Thank you for joining today's call. So I'll start off today by providing an update on our business and the progress we've made on construction. Then Jeff is going to walk us through our Q1 results and following our prepared remarks, we will take questions. But before I get into that, I want to take a moment and welcome Jeff Hart, who joined us on May the 1st as Northland Power's newly appointed Chief Financial Officer. Jeff brings over 20 years of financial leadership experience and deep experience in the energy industry. He's previously been CFO at two large publicly traded Canadian energy companies, Husky Energy and Synovus Energy. And with Jeff joining the team, we've completed the formation of our strong executive leadership team, and we think we're well positioned now to drive Northland's long-term growth, deliver on our mission and vision, and deliver value to shareholders. So welcome, Jeff. So now to jump into the update here on Q1. I want to start with health and safety. And health and safety remains a top priority across our business. I mentioned in our last call that I've been visiting sites across Northland Power's portfolio and meeting the operational teams. And I mentioned last call, and I can reiterate that the trend continues. The teams are committed, they're focused, there's a high commitment to safety and operational excellence. So these teams are committed to keeping everyone on our projects and at our operating facilities safe. And I do want to take a moment, you may have missed the news about it, but just to further demonstrate our commitment and performance on safety, This quarter, our EBSA utility in Columbia received the Honoris CCS Award for Innovation in Safety from the Colombian Safety Council. This was a recognition of an innovative online tool created in that part of our business, streamlining safe work processes and permit to work for field staff. So this innovation by the team and the recognition of that innovation, I wanted to call out here because it highlights the company-wide commitment to developing innovative solutions and enhancing safety in our business. I also now want to turn more to operations and construction. So you may have seen that we had a very happy event recently that we announced commercial operations for the Oneida battery storage project. That project was completed ahead of schedule and under budget. It is the largest energy storage project in Canada. It's a clear reflection of Northland's capability and expertise in safely and successfully delivering large-scale infrastructure projects. At the local level, the project created over 180 jobs during peak construction, and the project delivered more than 300,000 work hours without a single lost time injury. So Oneida is now part of the grid here in Ontario, and it's generating revenue. Canada's largest battery energy storage facility, one of the largest in the world, and it's operational as we speak. It's a great accomplishment for the team and for the partners in the project. I'd like to extend my sincere congratulations to the joint teams on a job well done, and I'm looking forward to our teams applying their expertise in the next wave of battery storage projects. including our Jurassic storage project in Alberta. So we also have our two other offshore wind construction projects ongoing, Heilong and Baltic Power, and together that represents approximately $15 billion in gross investment and 2.2 gigawatts of capacity shared between Northland and our partners. At Heilong, our project in Taiwan, we've made strong progress against several key fronts, and I'll take you through those. In April, we completed installation of the first turbine. This is a major milestone for any offshore project and we were happy to see that milestone accomplished. We have now completed the fourth turbine installation and construction continues to advance steadily and safely. On the manufacturing side, all the pinpile foundations are complete and the jacket foundation fabrication is progressing with several jackets in the final stage of production. We're also making solid progress on turbine components with about half of the generators and blades manufactured and good momentum on the cell and tower production as well. So if we move then to installation, all the pinpile foundations for HILONG 2 are in place. Over 50% of the HILONG 3 pinpile foundations have also been installed. Our offshore substation foundations are fully installed. One topside is in place. and cold commissioning is complete. So overall, Heilong remains on track to achieve full commercial operations by 2027. Turning to Poland, our 1.1 gigawatt Baltic Power offshore wind project is also progressing as expected. Fabrication of all 76 monopile foundations is complete. Manufacturing of the inner array cables is substantially finished, and blade, nacelle, and tower fabrication has begun. On the installation side, both offshore substation main foundations have been installed. The topside structure is mechanically complete. An electrical outfitting is underway. In the water, 13 monopile foundations and two offshore substation monopiles have been installed. Additionally, all of the horizontal drilling work for the export cables is complete, securing all four cable connections between offshore and onshore substations. So as you can tell, we've had successful completion of Oneida and continued progress on the offshore wind projects. So we are actively advancing our development pipeline. And so we, of course, are also at the same time developing new opportunities in our core markets. And as part of this pipeline, we've secured funding and begun construction on the Jurassic Battery Energy Storage Project, our second battery energy storage project in Canada. With the experience gained from Oneida, we're confident in our ability to deliver Jurassic best on time and on budget. In terms of other activities happening now to develop the pipeline in Ontario, we are engaged in the upcoming LT2 procurement process. and we are evaluating opportunities within that process. Our early stage ScotWind offshore wind project is also progressing, and we're continuing to explore attractive investment opportunities in key markets like the Baltic region, where we see a strong commitment from governments to ramp up support for renewable development. We are also working on other exciting growth opportunities, which I hope to share with you later in the year, and I'm sure you're all eagerly anticipating our investor day. So before I hand things over to Jeff to review the financial results, I do briefly want to comment on our first quarter performance. As you've seen, our results were impacted by a historically low offshore wind resource in the North Sea. The wind was the lowest we've seen across our time invested in those Europe offshore wind assets. And that needs to be held in contrast to what was record high wind performance in the same quarter last year. So when we're comparing, we are comparing record high to unusual low. And despite this, though, our operational performance was strong. Fleet availability stood at above 95% in the first quarter. And here in Northland, we're very focused on being good at the things within our control. So our teams were available. And had the wind resource been stronger, we would have been able to monetize that. I will also note that the teams did react to the low wind conditions, and they brought our planned maintenance forward. So our planned maintenance is ahead of schedule on the year. And this is an example of our operational teams in action. With the lower wind resource, we could do more of that maintenance earlier in the year, so that when the wind does blow, we are ready to take advantage of that through the remainder of the year. So our operating record is solid, and we're maintaining our assets in good condition to ensure we can fully capitalize on favorable wind conditions when they occur. And I will also add, I'm sure it's not lost on anyone, that as Heilong and Baltic come on stream, and as Oneida has come on stream, The diversity, first of all, the geographic diversification and the technology diversification, the benefit of that shines through. Our strategy is to execute on projects in different geographies, and those different geographies improve the balance of our production. And we will see the benefit of that coming over time as these projects are delivering results. I will add that even with the low wind this quarter, we remain on track to meet the financial guidance we set out earlier this year. I'm also just going to take a quick moment to touch on recent macroeconomic questions related to U.S. tariffs and impact that they may have on our business. I can advise that today tariffs have minimal impact on our business here in Northland Power. None of the power that we sell is subject to tariffs. And in terms of development and construction, our supply agreements for our offshore wind construction projects and Jurassic Battery project are locked or have robust provisions to provide protection from tariff costs. So across our portfolio, we are in a good position in terms of dealing with this particular set of circumstances. So 20... Before I continue on, I will just say I'd ask all of you to harken back to our fundamentals here. We do see that globally the demand for energy is growing and the demand for renewables and natural gas is strong. And we at Northland are well positioned to meet this demand with our capabilities across technologies with solar, onshore and offshore wind, gas, and now batteries, an important new component, a new tool in the toolkit. Plus, we have the capability to deliver in Canada, in Europe, and in Asia. And these are capabilities that I think are key differentiators for Northland Power into the future. 2025 is a year of milestones for Northland, and our long-term value proposition remains strong. We have the scale and the platform to pursue and execute large-scale power projects. We have technological diversification, including the ability to develop, construct and operate offshore wind, onshore solar and wind, battery storage and natural gas power infrastructure. And the global diversification will be further enhanced when our two offshore projects are completed. We also have strong people. Our team has the capability to originate, develop, construct, finance and operate infrastructure projects globally. So overall, we see that the picture is strong for Northland heading into the future. Investment in renewables is accelerating. Renewable sources account today for just over 30% of global electricity generation, and that's projected to rise to 46% by 2030, according to the IEA. So again, Northland well positioned to capitalize on this shift and help meet the world's evolving energy needs and deliver value to shareholders. So with that, I'm going to turn things over to Jeff to give us a more detailed update on the financials.

Thank you, Christine, and good morning, everyone. I'm delighted to be here today as the newly appointed Chief Financial Officer of Northland Power. Joining the Northland team on May 1st has been exciting, and I'm eager to contribute to the company's success and growth and have been impressed with the passion and dedication of our people. I look forward to working closely with Christine and the rest of the Northland team to build in an exciting future that will create shareholder value. With a strong balance sheet, a talented team, we are well positioned for our construction program and future developments. Now I'll turn to our first quarter results. During the first quarter, we generated adjusted EBITDA of $361 million, which represents a 20% decrease compared to the same quarter of 2024. And this is predominantly due to the low offshore winds that Christine noted earlier. Despite the weak winds, our operations have performed well, driving strong availability, as demonstrated by our achievement of 95% commercial availability in the offshore wind business. The low offshore winds were partially offset with a higher rate base and customer growth at EBSA, and this combined with strong performance across the onshore fleet, where we achieved availability of 97%, we offset some of those low wind impacts. During the first quarter, we generated free cash flow of $157 million, which is 30% lower than the same quarter of last year. And on a per share basis, free cash flow in the first quarter of this year was $0.60 compared to $0.88 in the first quarter of 24. And despite the low offshore winds in Q1, we expect to maintain our financial guidance. I do want to highlight that we have made some changes to our non-GAAP measures. Going forward, we will not be reporting two cash flow metrics, but will rather have a single cash flow measure that will be more aligned with our peer group, which provides a more appropriate run rate measure. Our new free cash flow metric, as reported in our results, is the same as our adjusted free cash flow metric that we previously reported. This metric, we believe, represents North Band's ability to generate cash flow from the operating business before any investment related decisions are made. And speaking of investment decisions, I'll turn to our three construction projects. We successfully completed the Oneida battery storage project ahead of schedule and below budget. At the High Long and Baltic Power offshore wind projects, as of the end of the first quarter, the projects have spent $8 billion to date, with remaining gross capital expenditures for the projects expected to be $7 billion. We've spent more than 50% on these two offshore wind projects, which demonstrates significant progress towards the achievement of commercial operations expected in 26 and 27. These accomplishments highlight Northland's commitment to delivering high-quality energy infrastructure and our readiness to capitalize on growth opportunities in global energy markets. We have $1.1 billion of available corporate liquidity and have multiple funding tools to deliver on a disciplined growth strategy in our core markets. And we'll share more details on our strategy and financial framework with you as part of our investor day expected to be scheduled later this year.