Northland Power Inc.

Welcome to the Northland Power Conference call to discuss the fourth quarter and year-end 2025 results. As a reminder, this conference is being recorded on Thursday, February 26, 2026 at 10 a.m. Eastern. Present for this call are Christine Healy, President and CEO, Jeff Hart, Chief Financial Officer, and Adam Beaumont. Senior Vice President of Capital Markets. Before we begin, Northlands Management has asked me to remind listeners that all figures presented during today's call 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. Please go ahead.

Good morning, everyone. Thank you for joining us. I'll begin with an overview of our strategic priorities and an update on our two large construction projects. Jeff will then provide a review of our fourth quarter and full year financial results, as well as our 2026 guidance. Following our prepared remarks, we will open the line for your questions. In 2025, we made progress across our operational, financial, and organizational priorities. We expanded and reinforced our leadership team with the addition of new executive members. We introduced a new global strategy outlining our growth priorities, a five-year funding plan, and how we will create long-term value for shareholders. We advanced our construction projects, completing key milestones at our two offshore wind projects, Heilong in Taiwan and Baltic Power in Poland. And following the successful completion of Oneida last year, we are advancing our second battery storage project in Alberta, Canada, called Jurassic Best. Executing these projects is our primary focus through 2026, and together they will add 2.2 gigawatts of capacity by 2027. And we delivered on our financial commitments, achieving our adjusted EBITDA guidance and outperforming on free cash flow per share. Our performance in the fourth quarter was supported by 96% operating availability and record high generation from our German offshore wind assets. Before we move into the strategy, I want to take a moment and emphasize that our performance is underpinned by our commitment to our people. As I've talked about before, health and safety are core values for Northland. In 2025, we reinforce this commitment with the launch of our 12 golden safety rules. These rules are non-negotiable and ensure that our standards are consistently understood, respected, and applied across all work environments. A safe workplace is the prerequisite for the work we do. Building on that foundation, we are advancing a strategy focused on disciplined growth and long-term value creation. We're at an inflection point in electricity markets. After decades of flat electricity demand We're entering a period of rising demand that some call a power super cycle. It's driven by electrification, industrial growth, population growth, urbanization, and a rise in AI demand. As power generators, our strategy plans to capture this momentum and double our gross operating capacity to 7 gigawatts by 2030. This is not just about scale. It's about focus and finding the right high-quality projects that add real value to our business. Our focus on achieving specific free cash flow targets by 2030 is more than a goal. It is the lens through which we evaluate every capital allocation decision we make. To strengthen our 2030 goals, we're focused on three pillars, deliver, strengthen, and grow. The deliver pillar of our strategy is focused on operational performance and successfully bringing 2.2 gigawatts of projects under construction into operation. Our track record of executing and delivering large-scale projects is one of the things that sets Northland apart. The strengthen pillar is about building a foundation for scale, including our target of 50 million in annual cost savings by 2028. To support this, We have already transitioned to a regionally focused operating model, split into the Americas and international business units, designed to build scalable platforms in our core markets and capture operational leverage by clustering assets in those core markets. This structure streamlines how we operate, enhances local accountability, and maintains global standards. At the same time, we have centralized all of our development activities into one global organization. This ensures that every project, regardless of technology or geography, competes for capital on a consistent basis, so only the most value-accretive projects move forward. Finally, under the grow pillar, we continue to high-grade our pipeline, advancing new capacity to supplement our current construction. An example of this is the two recently acquired late stage battery storage projects in Poland. This acquisition alongside Baltic Power demonstrates our strategy of clustering high value assets in a core European market. Our approach is technology agnostic, focusing on our core markets where fundamentals are strongest. Our plans for Europe are driven by an ongoing and increasing need for energy security. I recently attended the North Sea Summit, which took place in January, where nine European governments reaffirmed their commitment to expand offshore wind in the North Sea through a coordinated regional approach, including up to 100 gigawatts of projects by 2050 with an interim target of 20 gigawatts for the 2030s. This North Sea Summit outturn is a consistent theme we see across Europe, a commitment to build out of renewables for decades to come. offshore, onshore, and battery storage. For developers like Northland, this provides important long-term demand visibility. Greater policy alignment and infrastructure coordination should help reduce development friction, improve permitting timelines, support enhancements to the supply chain, and ultimately enhance capital efficiency. Europe continues to show conviction that offshore wind will play a critical role in meeting the region's energy demand. and advancing the clean energy transition, strengthening energy security, improving affordability and supporting industrial competitiveness. And in Canada, electrification and industrial growth are accelerating the need for new supply. Canada continues to be a growth market for us, with every province forecasting power demand growth. We see opportunities in several of our technologies, including gas-fired generation and battery storage. To capitalize on this opportunity, our five-year growth and funding plan has been set with the right foundation supported by an investment grade balance sheet. We've increased our project return thresholds to a minimum of 12%, demonstrating that we will invest only in the most value accretive opportunities. We are focused on advancing the opportunities where we can apply our global expertise to local execution. I'll turn now to more specific details on construction progress. At Heilong, we've reached several major milestones, including the installation of all 73 foundations, all four export cables, and both offshore substations. To date, we have successfully installed 37 turbines. Twenty of those turbines are now actively generating power. The project team has been working hard over the winter to optimize our schedule and have had a crew on standby to continue commissioning when weather permits. As we've discussed in previous calls, offshore Taiwan, we work with a weather window. So full in-water activities will resume in earnest later in April when that weather window reopens. The project is on track for commercial operation in 2027. At the Baltic Power Offshore Wind Project in Poland, we achieved two key milestones this quarter with the completion of all monopile foundations and the completion of grid interconnection works by the local utility. We also completed the installation of both offshore substations, two of four export cables, and 30 of the project's 76 wind turbines. The project is on track for commercial operation in the second half of 2026. We're also making strides in our battery storage portfolio. At Jurassic Bass in Alberta, foundations have been installed and the battery packs have arrived in Canada. The project is on track for commercial operation in 2026. Looking ahead, our priorities are clear. Deliver our construction projects, optimize the value of our operating portfolio, and advance and high-grade our development pipeline. The recent acquisition of two late-stage battery storage projects in Poland adds scale to our European platform. We continue to advance both projects, having signed their battery supply agreements, and we're currently finalizing other procurement activities ahead of financing and the start of construction expected later this year. Building on our expertise and experience from the Oneida project in Ontario, we continue to see opportunities to expand our battery storage portfolio, and we are actively evaluating several projects. In November, we completed the required performance tests for a 23 megawatt capacity upgrade at our Thorold natural gas-fired facility in Ontario and officially secured a five-year contract extension through 2035. These are all examples which underscore the progress underway across Northland. Our disciplined approach to capital deployment, project execution, and excellence in operations delivers energy for our markets and value for our shareholders. I'll now turn it over to Jeff to walk us through the financial results.

Thank you and good morning, everyone. As Christine noted, we achieved our 2025 adjusted EBITDA guidance and exceeded free cash flow guidance. Strong wins at our offshore assets in Q4 and lower curtailment from grid outages resulted in higher than budgeted production and a 21% overage from the same quarter of last year. Our high operating availability of 96% allowed us to capture that benefit. The quarter also benefited from contributions from the Oneida Energy Storage Facility that commenced operations in May of last year, as well as increased market demand for dispatchable power at our natural gas facilities as a result of cold weather and third-party facility outages in Ontario. Adjusted EBITDA in the quarter was 390 million, a 25% increase compared to the fourth quarter of 2024. This increase was primarily due to higher production from offshore wind, contributions from Oneida, and increased market demand at our natural gas facilities. Net income for the quarter was $290 million compared to $150 million in 2024. And free cash flow per share for the fourth quarter was $0.46 compared with $0.31 in 2024. Turning to the full year, adjusted EBITDA for the full year was $1.25 billion in line with 2024 as lower offshore wind resource in the first half of this year offset contributions from Oneida and strong performance at our America's onshore wind assets. Free cash flow per share for the full year decreased to $1.46 from $1.53 in 2024. The year-over-year decrease was mainly due to higher scheduled debt repayments, lower offshore wind resource, and the non-recurrence of certain one-time items, partially offset by contributions from new assets and lower current taxes. For the full year, Northland recorded a net loss of $108 million compared to net income of $371 million for the full year of 2024. This reduction is primarily due to a non-cash impairment for North Sea One recorded in the third quarter of 2025. And we continue to advance our major construction projects. As of December 31st, High Long and Baltic Power have less than $4 billion of capital expenditures remaining to be incurred. Overall, both construction projects are continuing on track for commercial operations with overall costs aligned with original expectations as reported last quarter high long turbine commissioning has been slower than expected and it could impact pre-completion revenues and equity injections in the amount of 150 to 200 million northland share the shortfall and pre-completion revenues outlined above can be funded by several sources including liquidity Corporate liquidity, however, we and our project partners are actively looking at optimizations at the project level to provide funding, and we'll provide an update on this by mid-year. Turning to our 2026 financial guidance, we expect 2026 adjusted EBITDA to be in the range of 1.45 to 1.65 billion, an increase of approximately 25% from the 1.25 billion delivered in 2025. The key drivers of this increase will be contributions from Heilong and Baltic Power, as well as full-year contributions from Oneida and the commencement of operations at the Jurassic Best project in Alberta. These increases will be partially offset by lower contributions from North Sea One, following a scheduled step down in the feed-in tariff mechanism. We expect 2026 free cash flow to be in the range of $1.05 to $1.25 per share, compared to the $1.46 per share in 2025. The year-over-year decrease is due to several one-time items totaling 22 cents, which benefited 2025, including a German tax refund, deferral of Spanish debt repayments, and other items. This decrease is also attributable to ongoing foreign exchange hedging costs, higher debt service for the natural gas assets, and the cessation of capitalized interest on our hybrid debt as we enter operations in Baltic power. Partially offsetting this decrease is the additional contribution from Baltic Power representing approximately 20 cents per share. For 2026, we assume development expenditures of approximately 50 million, and this will be focused on selective opportunities in our core markets of Europe and Canada. Now turning to our balance sheet, with more than 900 million of available liquidity in our investment grade credit rating, we are well positioned to execute on a disciplined capital allocation plan.