Brookfield BRP Holdings Canada 4.875% Perpetual Subordinated Notes Q4 FY2024 earnings call

• 2024 was a record year with strongest operating and financial results ever. Delivered 10% FFO per unit growth, benefited from inflation-linked and contracted cash flows, acquisitions, and organic growth initiatives. Invested $12.5 billion in outstanding businesses, including investment in Neoen. Signed contracts for almost 19,000 gigawatt hours per year of generation, including landmark agreement with Microsoft to deliver 10.5 gigawatts of new renewable energy capacity between 2026 and 2030. Commissioned record 7,000 megawatts of new capacity globally. Generated record $2.8 billion of proceeds in 2024 at an average return of 25% IRR and approximately 2.5x invested capital. Finished the year with $4.3 billion of liquidity. Announced over 5% increase in annual distribution to $1.492 per unit, with 14 consecutive years of annual distribution growth of at least 5% since 2011.

In the fourth quarter, FFO was $304 million or $0.46 per unit, up from $0.38 per unit in the same quarter last year, a 21% year-on-year increase. Full-year FFO was $1.2 billion or $1.83 per unit, up 10% year-on-year. Hydroelectric business benefited from a strong second half from Colombian business Isagen. Wind and solar segments generated record funds from operations, up 30% from last year due to full-year contribution from recent acquisitions. Distributed energy storage and sustainable solutions segments generated record results, up 78% year-on-year with full-year contribution from Westinghouse.

• Announced an over 5% increase in annual distribution to $1.492 per unit. Expect to build off strong asset recycling momentum in 2025 to deliver larger and more recurring monetizations at healthy returns. Aim to deliver 12% to 15% long-term total returns for investors.

• Public market volatility and potential regulatory changes in the U.S. renewable sector, but no material adjustments expected to policies most impacting the business. Risk of tariffs and higher equipment costs, but managed through global procurement capabilities and ability to pass costs through PPA prices.

Q: With respect to the Microsoft framework agreement, can you give more context on exceeding targets?

A: The agreement is to deliver 10.5 gigawatts between 2026 and 2030. Expect to deliver significant capacity to Microsoft ahead of 2026 and the 10.5 gigawatts is increasingly the floor, not the ceiling as we have advanced development pipeline and strong demand.

Q: Can you give broader updates on efforts to replicate the Microsoft framework deal with other corporates?

A: Having discussions with potential broad-based power generation agreements, and also doing more project-by-project activity with hyperscalers, with more power and projects delivered in 2024 and expected in 2025 compared to previous years.

Q: What are your thoughts on developing or acquiring gas-fired generation?

A: Believes step change in energy demand is good for all forms of power generation. Will continue to be focused on renewable power, but gas may have a role in transition if it accelerates renewables build-out and offers attractive risk-adjusted return.

Q: How are contracts structured in terms of risk allocation and tax subsidies?

A: Take approach of locking in contracts with CapEx revenue, PPA, EPC and financing upfront. Increasingly putting adjusters in PPAs to keep development margins whole if there are changes to tax credits.

Q: How do you view your own share price right now in terms of capital allocation and buybacks?

A: Current market feels similar to Q3 2023, with strong fundamentals. Will continue to execute strategy and look at doing share buybacks as in previous similar market environments.