TransAlta (US:TAC)2025-11-06 12:04Operational Capacity and Strategy - TransAlta Corporation operates a diverse fleet with a total installed capacity of 9,014 MW as of September 30, 2025, including hydro, wind, solar, gas, and energy transition assets[42]. - Approximately 51% of the total installed capacity is contracted with creditworthy counterparties, providing stable long-term earnings and cash flow[45]. - The company has a significant merchant exposure in Alberta, where 58% of its capacity is located, with 77% of that capacity available to participate in the merchant market[40]. - The weighted average contract life for contracted capacity across all segments is 9 years, with the longest being 14 years for hydro assets[45]. - TransAlta's strategic priorities include optimizing its Alberta portfolio and executing its growth plan while maintaining financial strength and capital discipline[38]. - The company aims to deliver sustainable long-term shareholder value in an evolving energy landscape, focusing on core markets in Canada, the U.S., and Western Australia[37]. - The company is focused on opportunities within its core markets and aims to realize the value of its legacy generating facilities[38]. - The company completed the acquisition of Heartland Generation on December 4, 2024, adding 1,747 MW to gross installed capacity[46]. - The acquisition of Heartland added 507 MW of contracted cogeneration capacity and 950 MW of merchant natural gas-fired thermal generation capacity[181]. Financial Performance - Revenues for the three months ended September 30, 2025, were CAD 615 million, a decrease of 3.6% compared to CAD 638 million in the same period of 2024[46]. - Adjusted EBITDA for the three months ended September 30, 2025, was CAD 238 million, down 24.5% from CAD 315 million in the same period of 2024[46]. - Net loss attributable to common shareholders for the three months ended September 30, 2025, was CAD 62 million, compared to a loss of CAD 36 million in the same period of 2024[46]. - Cash flow from operating activities for the three months ended September 30, 2025, was CAD 251 million, an increase of 9.6% from CAD 229 million in the same period of 2024[46]. - Total consolidated net debt as of September 30, 2025, was CAD 3,785 million, slightly down from CAD 3,798 million as of December 31, 2024[47]. - Adjusted EBITDA for the nine months ended September 30, 2025, was $857 million, a decrease of $116 million or 12% from $973 million in the same period of 2024[101]. - Free Cash Flow (FCF) for the nine months ended September 30, 2025, was $421 million, down from $529 million in the same period in 2024, a decrease of 20%[108]. - The company is tracking towards the low-end of its Adjusted EBITDA guidance for 2025, with a target of $1,150 to $1,250 million[110]. - FCF guidance for 2025 is set between $450 to $550 million, compared to $569 million in 2024[110]. - The company expects FCF per share for 2025 to be between $1.51 to $1.85, down from $1.88 in 2024[110]. Production and Market Dynamics - Total production for the three months ended Sept. 30, 2025, increased by 439 GWh, or 8%, compared to the same period in 2024, primarily due to production from the Heartland gas facilities acquired in December 2024 and higher production from Alberta water reserves in the Hydro segment[72]. - Total production for the nine months ended Sept. 30, 2025, increased by 1,184 GWh, or 7%, compared to the same period in 2024, primarily due to higher production in the Hydro segment[73]. - Total production for the Wind and Solar segment for the three months ended Sept. 30, 2025, was 1,028 GWh, down 8% from 1,121 GWh in the same period in 2024[138]. - Total production for the Alberta portfolio for the three months ended Sept. 30, 2025, was 3,206 GWh, an increase of 438 GWh, or 16% compared to 2,768 GWh in the same period of 2024[189]. - Total production for the nine months ended Sept. 30, 2025, was 8,868 GWh, an increase of 209 GWh, or 2% compared to 8,659 GWh in the same period of 2024[199]. Costs and Expenses - Revenues for the three months ended Sept. 30, 2025, decreased by $23 million, or 4%, compared to the same period in 2024, primarily due to increased fuel and purchased power costs[84]. - OM&A expenses for the three months ended Sept. 30, 2025, increased by $36 million, or 25%, compared to the same period in 2024[85]. - Asset impairment charges for the three months ended Sept. 30, 2025, increased by $7 million, or 35%, compared to the same period in 2024[85]. - Interest expense for the nine months ended Sept. 30, 2025, increased by $34 million, or 15%, compared to the same period in 2024[94]. - The carbon price increased from $80 to $95 per tonne, impacting gross margin from Canadian gas facilities[154]. - Carbon compliance costs for the nine months ended Sept. 30, 2025, decreased by $63 million, or 86%, compared to the same period in 2024, primarily due to the utilization of emission credits[89]. - The company reported a favorable impact on carbon compliance costs due to increased production from lower carbon-emitting cogeneration facilities[154]. Shareholder Returns and Capital Management - The company declared a quarterly dividend of CAD 0.065 per common share, representing an annualized increase of 8%[61]. - The company repurchased and cancelled 1,932,800 common shares at an average price of CAD 12.42 per share during the nine months ended September 30, 2025[63]. - Liquidity as of September 30, 2025, stood at $1.6 billion, including $211 million in cash, sufficient to cover committed growth and sustaining capital projects[118]. Market Conditions and Pricing - Alberta spot power prices for the three months ended Sept. 30, 2025, were $51/MWh, down 7% from $55/MWh in 2024[75]. - AECO natural gas prices for the three months ended Sept. 30, 2025, were $0.63 per GJ, down 6% from $0.67 per GJ in 2024[78]. - The 2025 power price assumptions for Alberta spot range from $40 to $60 per MWh, while AECO gas prices are expected to be between $1.60 and $2.10 per GJ[114]. - The average spot power price per MWh for the three months ended Sept. 30, 2025, decreased to $51 from $55 in 2024, and for the nine months ended Sept. 30, 2025, decreased to $44 from $67 in 2024[205]. - The realized merchant power price per MWh for the three months ended Sept. 30, 2025, increased by $13 to $103 compared to $90 in the same period of 2024[206]. Debt and Equity Position - Total current assets decreased by $315 million to $1,458 million as of September 30, 2025, from $1,773 million as of December 31, 2024[219]. - Total liabilities decreased by $376 million to $7,280 million as of September 30, 2025, from $7,656 million as of December 31, 2024[217]. - Total equity decreased by $231 million to $1,612 million as of September 30, 2025, compared to $1,843 million as of December 31, 2024[220]. - As of September 30, 2025, total consolidated net debt stands at $3,785 million, representing 66% of total capital, compared to $3,798 million or 62% as of December 31, 2024[224]. - The company has $3,169 million in common shares, accounting for 55% of total capital, up from $3,179 million or 53% in the previous period[224]. - Recourse debt from U.S. senior notes is $965 million, which is 17% of total capital, slightly down from $995 million or 16% previously[224].