TransAlta Corp. Q1 FY2026 earnings call

TransAlta delivered solid operational performance in Q1 2026. Advanced data center strategy in Alberta, coal-to-gas conversion at Centralia on track. Hosted investor day. Closed acquisition of Far North Power. Progress on MOU with CPP Investments and Brookfield for data center development. Participating in ASO's Large Load Integration Working Group. U.S. DOE order on Centralia compliance. Added Mike Politesky as EVP Finance and Chief Financial Officer and Grant Arnold as EVP Growth and Chief Commercial Officer. Priorities for 2026 include improving safety, achieving EBITDA and free cash flow targets, advancing data center and Centralia projects, strategic M&A, and enhancing financial strength

Adjusted EBITDA was $204 million, a decrease of $66 million compared to first quarter 2025. Alberta merchant portfolio impacted by softer prices but hedging and asset optimization helped. Hydro segment adjusted EBITDA $35 million, down $12M y-o-y. Wind and solar segment adjusted EBITDA $95 million, 7% decrease y-o-y. Gas segment adjusted EBITDA $93 million, $11M lower y-o-y. Energy transition segment adjusted EBITDA down $36M y-o-y. Energy marketing adjusted EBITDA $17M, down $4M. Corporate costs $37M, 10% lower y-o-y. First quarter free cash flow $102 million. Alberta spot prices averaged $32/MWh, gas fleet realized $48/MWh, hydro fleet $46/MWh, merchant wind fleet $20/MWh. Hedged ~6,900 GWh in Alberta for balance of year at $64/MWh, ~5,500 GWh in 2027 at $65/MWh

Remain confident in achieving 2026 guidance range. 2026 guidance range for adjusted EBITDA around $1 billion and free cash flow around $400 million. Balance of year, Alberta generation hedged at $64/MWh, 2027 hedged at $65/MWh. Timeline for Centralia final investment decision in first quarter 2027 remains on schedule

Soft prices in Alberta merchant portfolio could impact performance. Lower wind resource and availability in eastern Canada affect wind and solar segment. Retirement of Ada cogeneration facility impacts gas segment. Ongoing expenses in energy transition segment partially mitigated by byproduct sales. Market volatility affects energy marketing performance. ASO draft process for phase 2a of large load integration is evolving and not final

Q: Color on Brookfield MOU for Alberta data center progress.

A: Significant progress, MOU comprehensive, working on definitive agreements, collaborative effort.

Q: M&A market progress.

A: Lots of deal flow, looking in core geographies, need accretive, contractive, non-harm to balance sheet.

Q: Management team additions impact.

A: Strong team in place, not slowing down M&A or data center progress.

Q: Alberta MOU definitive agreements timeline.

A: Working toward end of year, well advanced.

Q: Thermal development pipeline.

A: Includes Alberta sites and south of border opportunities.

Q: Near-term headwinds in Alberta.

A: Mild winter and new gas generation led to lower spot prices, but fleet available for weather events.

Q: Forwards for 2028 and beyond.

A: Forward curve not reflective of expected, net load increase expected to raise prices.

Q: Carbon tax impact on MOU.

A: MOU positive, awaiting final outcomes, not gating item.

Q: Hedge updates.

A: Active in hedging, focused on 2027 and beyond, forward curve not reflective of expected for 28-29.

Q: MOU site development at Key Hills.

A: Operating facility, rezoning approved, no major permit needs.

Q: Centralia update.

A: Complying with DOE order, not expecting facility to run, advancing coal-to-gas conversion.

Q: Balance sheet and asset divestitures.

A: Looking at portfolio rotation, seeking accretive M&A, maintaining strong financial position