Polaris Renewable Energy Inc.

Good morning everyone and welcome to the Polaris Renewable Energy Incorporated first quarter 2025 conference call. At this time all participants are in a listen only mode and the floor will be open for questions following the presentation. If anyone should require operator assistance during the conference please press star zero on your phone keypad. Please note this conference is being recorded. I will now turn the conference over to your host Anton and Mark, the floor is yours.

Thank you. Good morning everyone and welcome to our first quarter earnings call for Polaris Renewable Energy. In addition to our press releases issued earlier today, you can find our financial statements, MD&A, on both CDAR Plus and on our corporate website at polarisrei.com. Unless noted otherwise, all amounts referred to are denominated in U.S. dollars. I'd also like to remind you that comments made during this call may include forward-looking statements within the meaning of applicable Canadian securities legislation regarding the future performance of Polaris and its subsidiaries. These statements are current expectations and as such are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. These risks and uncertainties include the factors discussed in the company's annual information forum for the year end of December 31st, 2024. I am joined this morning, as always, by Mark. At this time, we'll walk through our financial highlights. Power generation, consolidated power production for the quarter was 216,344 megawatt hours versus 213,434 megawatt hours for the same period in 2024. For Nicaragua in the first quarter of 2025, production was 114,424 megawatt hours, marginally lower compared to the same period last year. Consolidated production in Peru for the three months ended March 31st was in line with the comparative period in 24. At our Dominican Republic Kanoa 1 solar facility, we produced 16,083 megawatt hours in the three months ended March 31st, compared to 14,530 MWh in the same period last year. For Ecuador, in the first quarter of 2025, average production of 11,999 MWh eclipsed the same period last year, which totaled 10,223 MWh. In Panama, Vista Hermosa Solar Park production of 5,433 MWh was marginally lower in the same period last year at 6,130 megawatt hours. And finally, production for Punta Lima since March 3rd, 2025. The acquisition date was 3,558 megawatt hours. Revenue. Revenue for the quarter was 20.3 million during the three months ending March 31st, compared to 20.6 million last year. Net earnings. There was a net loss for the quarter, 10.4 million, owing principally to one-time finance costs incurred around the pay down of four loans compared to net earnings of 4.4 million Q1 24. Adjusted EBITDA. Adjusted EBITDA 15 million for the quarter compared to 5.7 for the same period last year. Cash generation. Net cash from operating activities for the quarter was $11.8 million, higher than the $8.7 million for the same period last year. Net cash used in investing activities for the three months ending March 31st was $14.7 million, compared to $1.3 million the same period in 2024. Principal use of funds was around the acquisition of Punta Lima Wind Farm in Puerto Rico, And finally, net cash used in finance activities for the quarter ended March 31st is higher than the comparative period last year, reflecting the early debt payments of the four credit facilities, totaling 120.6 million, including 114 million of principal and 6.4 million of accrued interest and prepayment penalties. And finally, dividends. I'd like to highlight that we have already announced we will be paying a quarterly dividend on May 23rd, a 15 cents share to shareholders of record on May 12th. With that, I'll turn the call over to Mark who will elaborate on Polaris' first quarter results as well as on current business matters.

Okay. So I'll just comment first, starting on Nicaragua from an operations perspective. In terms of the steam units, they were flat to actually slightly up quarter over quarter. Whereas the binary unit was down, I would say that there was some unplanned downtime, which resulted in approximately 1,200 to 1,500 megawatt hours less. So the change from Q4 to Q1 was 100% related to binary unit downtime, not a resource issue. So those issues resolved and we do not expect them to continue for the remainder of the year. Peru, similar issues I would say. Again, the resource in Peru has been very strong. We're in the rainy season, it continues and resource was very good. We did have some unplanned downtime at Ocho de Agosto to fix some bearings and just given the resource was actually stronger than normal, it just came with a lot of sort of sediment or more than sediment in the intake, and that was about 4,000 megawatt hours effect on Ocho de Gusto. But again, resource quite strong. I would say the rest of the production for the group was in line. Some was up, some was down. The DR was up given the panel replacement program. Ecuador was a little bit higher. Panama was a little bit lower. That's all purely resource driven. And then the comments on Punta Lema would just be that it was only 28 days of consolidation in the numbers. So there's really not much to read into that. I would say that the actual production of the facility in Q1 was 16,150 megawatt hours, which would have been slightly above budget for the quarter. Obviously, we didn't consolidate it. But Q1 was tracking actually a little bit higher than what budget is based on what we were targeting for that facility, which is great. In terms of the balance sheet, there is a lot of noise in the corner just because of the repayment. We raised the bond in Q4, but we repaid all of the debt in Q1. But I just say the most important thing is that we've ended up now with debt of about $225 million is the important number in cash. hand of 91 million so we are well cast up to to to grow the business so very strong balance sheet and and really where we focused I would say right now it's the the number one focus is the ASAP battery program in Puerto Rico it's by far and away the at the top of a list for us in terms of our return profile and in terms of quality of contract profile. So I had mentioned on the last call that we would have an update and we continue to progress. I would say that the targeted signing on their end that they've put down is mid-June. So I'll say 60 to 75 days because they always take a little bit longer than we want, but we're doing weekly calls with them. We are back and forth on contract drafts. So my hope is that by sort of our Q2, we have signed the contract and can report and give I would say a few more specifics on the actual call it CapEx and return. But for the high level sketches is what we're aiming for right now is an 80 megawatt battery times four hours. And the way that the payment stream works is it's $16,000 per megawatt of capacity per month. And now that is assuming you get an ITC credit, which we do believe we will still get that. And that would take your, so the gross capex, the way it works is we're estimating right now about 70 million, but that's before any ITC grants, which are likely gonna be in the 15 to $20 million range. So that is, call it a net capex of $50 million. So we definitely have cash on hand to fund that. If we did sign at the end of, or in June, end of sort of second quarter, we could still see realistically a 12 month time frame to COD. That's the timing we're looking at. And when you run through the map, you'll see that in terms of... Oh, it's also worth mentioning that several of the key cost items for that are actually paid for by the off-taker, the biggest one being insurance. So the revenue line is going to be very close to the EBITDA line. Given that we already have an operating facility there, we do think that the the down margin should be very high, especially when your insurance cost is a pass-through to the off-taker. So really, I would say in terms of our capital right now, that the plan would be to earmark it for that, and we'll know in the next two months. Again, when you do sort of the numbers, net capex of 50, if we're looking at, that's assuming ITC should be about 15 million of EBITDA. On that, it's a 20-year contract and it's a pure capacity payment. So we definitely like that a lot. And we do, as always, have a pipeline of acquisitions. I would say the return profile on those has improved in these markets. However, I would still say the gap between What we think we're looking at with the ASAP program and what we think we can get on these operating acquisitions is still big enough that it dictates that we're going to prioritize the ASAP. However, we can definitely switch gears if for whatever reason those ratios get tighter. And I would also say that we do think with the bond that we could tap into more capital for an acquisition of call it operating assets, which pretty much everything we're looking at on that side are operating assets on the acquisition side. So I think in terms of increasing the size of the bond as long as it's for call it operating assets i think that'd be a good use of proceeds and i think we can we could look to that so i do see a combination of those two things as being very feasible in the next six six to nine months and that's really they're going to be the focus on growth um in the next yeah six to 12 months so um and then and then lastly i'll mention that in the porter um We purchased 26,000 shares on the NTIB. Year to date, we're at 38,000. I think we've done sort of 90,000 since we started. Small numbers, but we're going to continue to chip away at these prices. Targeting, I would say, anywhere from $1.5 to $2 million a year would be really what we're looking for. Now, if the shares... I would say if they went down, we would increase that number in terms of putting more capital to work. But I don't think we're going to go too much, given, I would say, the opportunities that we have facing us. We want to make sure that we have enough capital to execute on those opportunities. With that, we can open it up for questions.