Polaris Renewable Energy Inc.

Good day, everyone. Welcome to the Polaris Renewable Energy, Inc., second quarter 2025 conference call. At this time, all participants have been on the listen-only mode, and after management's prepared remarks, there will be a question-and-answer session. I would now like to turn the call over to Anton Jelic. The floor is yours.

Thanks, Kelly. Good morning, everyone, and welcome to the second quarter earnings call for Polaris. In addition to our press releases issued earlier today, you can find our financial statements and 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 Renewable Energy 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 our company's annual information forum for the year ended December 31st, 2024. At this time, I'll walk you through our financial highlights. Power generation. Consolidated power production for the quarter was 215,797 megawatt hours versus 186,886 megawatt hours for the same period in 2024. In Nicaragua, in the second quarter of 2025, our production was 110,895 megawatt hours, marginally lower compared to the same period last year at 114,046 megawatt hours. For the three months ended June 30th, total power production from the company's three hydroelectric facilities in Peru was 54,778 megawatt hours, versus 42,374 MWh during the same period last year. At our Dominican Republic Kanoa One solar facility, we produced 15,647 MWh in the three months ended June 30th compared to 14,613 last year. In our Punta Lima wind project in Puerto Rico produced 17,814 MWh exceeding management's expectations with no comparable production last year as Polaris had not yet acquired the facilities. For our hydro in Ecuador in the second quarter of 2025, average production of 12,687 MW eclipsed the same period last year with a total of 11,253. And finally, in Panama, Vista Hermosa Solar Park production of 3,976 MWh was marginally lower than the same period in 2024. Revenue. Revenue was 21.6 million during the three months ended June 30th, compared to 18.7 in the same period in 2024. Adjusted EBITDA. Adjusted EBITDA, $15.4 million for the quarter compared to $13.3 last year. Furthermore, for the six months ending June 30th, the company realized $30.4 million in adjusted EBITDA compared to $29.1 million in the same period last year. Net earnings. Net earnings for the quarter was $2.2 million compared to $985,000 for Q2-24. Cash generation, net cash from operating activities for the six months ended June 30th was broadly in line with the same period last year. Net cash used in investing activities for the six months mainly reflects the initial $15 million payment for the acquisition of Punta Lima Wind Farm while there was no comparative transaction in 2024. Net cash used in financing activities also for the six months was higher than the comparative period in 2024, reflecting the early debt repayment of four credit facilities, totaling $120.6 million. Dividend. Finally, I'd like to highlight that we have already announced we will be paying a quarterly dividend on August 22nd of $0.15 per share to shareholders of record on August 11th. With that, I'll turn the call over to Mark, the library and employers' second quarter results, as well as on current business matters. Thanks.

Thanks, Anton. Yeah, so high-level comment with the quarter, I'd say it showed the benefits of diversification. We had a full quarter of Punta Lima in there, and we had better hydrology in Peru and Ecuador, and the Punta Lima quarter the wind resource was stronger than what we budgeted. So those were both above budget, which was great. I'd say both solars were in line. Irradiation was a little bit lower than expected, but definitely within budget parameters. And then San Jacinto did come in below due to some unplanned maintenance at the end of June. So for the last 10 or 11 days, it was lower than normal. had to do with repairing uninterruptible power supply, which had downtime associated with it. And then that did cause some increased cycling in, well, 6-2 for several weeks, which has since recovered back to normal conditions. But it did have an impact of about – 2,200 megawatt hours in the quarter. But net, on average, I would say we were up marginally from budget on a consolidated basis given the outperformance in the hydros and the wind. I would also comment that the costs continue to be contained and below inflation due to efficiency gains that we're seeing. This quarter did have a full quarter of Punta Lima, so the costs on a consolidated basis did go up. But if you look at Q2 of last year, our actual off costs and G&A for the rest of the company is down year over year. So I think that's great. With regards to sort of rest of year, what we expect, it is worth reminding people that Q3 is the dry season. It's always the dry season. So the Peru hydros and Ecuador hydros are always the lowest this quarter. We also have moved the major maintenance in San Jacinto to actually January of next year. So that's going to be bumped out. So it should be running. There'll be no maintenance at San Jacinto, no planned maintenance for the rest of this year. And I would say that we should be in the net, call it 49 to 51 megawatts, at San Jacinto for the rest of the year. We would expect the solar assets to continue to run at similar levels to the recent quarter, a little bit higher. So that's with respect to the quarter and call it rest of the year for the current plants. With respect to the growth and the development, the big focus remains Right now, the most near term is the ASAP program in Puerto Rico, which is the Battery Project. We are confident that the contract will be submitted for approval from the authorities on Friday of this week or first thing next week. But we will likely be doing a press release to highlight that. It does not mean that it's... approved but we do think it's a very big step for us and we'll start the clock ticking on the approval process I think if you assume anywhere from a 30 day to I'd say worst case 90 day approval process that can still put us that would allow I would say a target of mid year next year for COD as possible so we're still going to be gunning for that and And I would also say that from what we've seen, capital costs, at least on the battery side, continue to be very attractive, if anything, getting a little bit better. So look for that press release, and we're very excited about that. We're also hopeful that this will not be our only storage project in Puerto Rico. We are in conversations with other developers that have abilities to do storage projects. There is also something called SO2, which that's more of a, we think, a next year event, but there is definitely interest on the side of the parties and the government to do more after the current round. So, you know, we definitely think there's interest there as well. So one way or the other, I think there will be more storage after the first SO1 contract. And then I think I should also mention in terms of other, call it brownfield development in the Dominican, as people know, we have been delayed on that. However, things are moving. We have several key approvals and green lights for ministries such as C&E, the environment ministry, attend to it. So we are... We are getting over some key hurdles here, and we are looking to finalize the terms of the contract. It is for sure going slower, but I do think by the end of this year, we could have a green light on the Kanoa 1 expansion. And I would note that if we're able to move both of these projects forward, They will be the first brownfield development projects for the company. Our track record has been more acquisitive. We're buying even shovel-ready projects, but not doing our own development. So we are doing our own development for these two because they're brownfield. That is new for the company, and it is a strategic initiative. And I think if we can move these forward, I think it's a great sign that that initiative is working. And in the end, it should, we believe, create more shareholder value in the long run as we're keeping, call it that, development margin. However, we will plan to supplement that with M&A. We are involved in several processes as we speak, as we always are. I think the only thing I would say is we're trying to be quite opportunistic on that. And I would say multiples have come down there. However, the opportunity on the storage side from our perspective, has gotten better given where the capital costs are going and we're seeing more opportunities that I would just say that the bar is, if anything, moving the bar up a little bit in terms of what we need to see on the acquisition side. But we have a good balance sheet to do both. Had $91 million in consolidated cash. This year to date, I'll just mention we've purchased 53,000 shares for cancellation through the NCIB. And we did about half of that in the quarter, Q2. And I would expect that the amounts going forward to be quite similar to that, at least in the near term unless things change dramatically. So not a huge use of capital, but we do – We like being in the market. We like the shares. We think there's value there, so we will continue to be in the market buying small amounts as we move forward. So that's it. We can open up for questions now.