TransAlta Corp. Q4 FY2025 earnings call

• 2025 performance: Delivered adjusted EBITDA of $1.1 billion, free cash flow of $415 million or $1.73 per share, and average fleet availability of 92.3%. Lower power pricing in Alberta and lower wind resources impacted the environment. - Business推进: Entered tolling agreement with Puget Sound Energy for Centralia facility redevelopment. Amended and extended committed credit facilities totaling $2.1 billion. Acquired Far North Power adding 315 MW dispatchable generation. Optimized Alberta portfolio by mothballing Sundance 6 and Sheerness 1. Integrated Heartland. Successfully completed ERP system. Advanced three natural gas generation projects in Alberta. Entered MOU with CPP Investments in Brookfield to advance data center project. Board approved 8% increase in common share dividend. - 2026 priorities: Improve safety and fleet availability. Achieve adjusted EBITDA and free cash flow within 2026 guidance ranges. Maximize value of legacy thermal sites by advancing data center project and Centralia coal to gas conversion. Pursue strategic M&A and maintain financial strength.

In 2025, TransAlta delivered adjusted EBITDA of $1.1 billion, free cash flow of $415 million or $1.73 per share, and average fleet availability of 92.3%. Hydro segment adjusted EBITDA was $285 million in full year 2025. Wind and solar segment delivered adjusted EBITDA of $338 million in 2025, a 7% increase compared to 2024. Gas segment had adjusted EBITDA of $438 million in 2025. Energy transition segment delivered $100 million of adjusted EBITDA in 2025. Energy marketing segment contributed adjusted EBITDA of $85 million in 2025. Corporate costs were $27 million in 2025.

2026 outlook: Adjusted EBITDA expected in range of $950 million to $1.1 billion, free cash flow in range of $350 million to $450 million or $1.18 to $1.51 per share. Factors influencing: Centralia ceased operation impacting adjusted EBITDA and free cash flow until conversion. Alberta spot power price expected under pressure $40 - $60 per MWh. Average hedge price decreased from 2025 levels. Lower contributions from Sarnia due to contract step down and facility decommissioning. Higher contributions from Alberta portfolio through carbon credits.

• Lower power pricing in Alberta and lower wind resources impacted operating environment. - Uncertainty in Centralia coal to gas conversion, including potential extension of 90-day order. - Pressure on Alberta spot power price. - Decrease in average hedge price. - Lower contributions from Sarnia due to contract expiry and facility decommissioning.

Q: Mark Jarvie with CIBC asked about details on the data center opportunity, including ramp-up of 230 MW, risk sharing terms, and ASO engagement.

A: Difficult to give detailed MOU info, speed to power is priority, commercial framework with CPP Investments and Brookfield is appropriate, ISO and provincial government are deliberating phase two.

Q: Robert Hope with Scotiabank asked about MOU moving to firm contract and M&A market views.

A: Need to finalize definitive agreements including PPA and land leases, M&A market active, seeing opportunities in renewable and thermal generation, example of Far North acquisition.

Q: John Mould with TD Cowan asked about key gating items for MOU to binding agreement and repowering opportunities.

A: MOU has essential commercial elements, need to finalize definitive agreements, repowering opportunities like Keep Hills 1 and Sundance 6, preference for contracted generation.

Q: Maurice Choi with RBC Capital Markets asked about data center MOU termination fee and funding.

A: Can't get into termination fee terms, capital investment for phase one is negligible, funding manageable with existing free cash flow and debt capacity.

Q: Benjamin Pham with BMO asked about Keep Hills phase one capital spend and data center negotiation process.

A: Capital investment for phase one is negligible, comprehensive process with CPP Investments and Brookfield, expectation of hyperscalers.

Q: Julian DeMullen-Smith with Jefferies asked about long-term financial plan and ASO process uncertainties.

A: Intention to provide outlook to 2029 at investor day, factoring in phase one and Centralia, expectation to handle ASO process uncertainties.

Q: Patrick Kenny with NBCM asked about Alberta interties influence and Centralia 90-day order.

A: Optimistic about interties creating opportunities, fully compliant with 90-day order, focus on getting clarity, conversion supported by relevant parties.