TransAlta (US:TAC)2021-05-13 20:25Financial Data and Key Metrics Changes - The company reported a 41% increase in comparable EBITDA, reaching CAD 310 million, and a 23% increase in free cash flow per share, amounting to CAD 0.48, compared to Q1 2020 [10][26][27] - Cash flow from the hydro fleet increased significantly from CAD 23 million to CAD 72 million due to the elimination of PPA obligation payments [28] - Free cash flow for the quarter was CAD 129 million, approximately 20% higher than the previous year [27] Business Line Data and Key Metrics Changes - The Alberta Hydro segment benefited from strong pricing, achieving an average realized price of CAD 122 per megawatt hour, a 28% premium over the average spot price [41] - The Energy Marketing segment delivered CAD 45 million in cash flow, capitalizing on favorable trading conditions [31] - The Wind and Solar segment's cash flow was down modestly due to line loss provisions, but higher realized pricing and the addition of the Skookumchuck facility partially offset this [29] Market Data and Key Metrics Changes - The average pool price for Q1 settled at CAD 95 per megawatt hour, influenced by extreme cold weather in February [40] - Power prices in Alberta are expected to settle at the higher end of the guidance range, around CAD 65 to CAD 70 per megawatt hour for the remainder of the year [42] Company Strategy and Development Direction - The company aims to be the supplier of choice for customers focused on sustainable growth and decarbonization, with a focus on advancing its three core operating pillars: TransAlta Renewables, Alberta Hydro, and Thermal Generation [19][20] - The company is actively pursuing growth opportunities, including the Garden Plain wind project and additional wind projects in its U.S. portfolio [23][24] - The company is committed to maintaining liquidity in excess of CAD 2 billion to support its growth initiatives and coal-to-gas conversion projects [17] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the Alberta power market, expecting pricing to remain stable and supportive of the company's financial performance [65] - The company anticipates strong cash flow performance for the remainder of the year, with EBITDA and free cash flow expected to be at the upper end of guidance [44] - Management highlighted the importance of flexibility in operations, particularly in light of increasing renewable energy in the market [68] Other Important Information - The company announced it would not proceed with the Kaybob cogeneration facility and has initiated arbitration against Energy Transfer Canada for wrongful termination of the agreement [18] - The company is exploring carbon capture and storage solutions for future adoption [16][100] Q&A Session Summary Question: Discussion on the Garden Plain wind project and contracting plans - Management is actively marketing the remaining 30 megawatts of the Garden Plain project and is optimistic about contracting opportunities [58] - The estimated CAD 17 million EBITDA is based on the current contract and various scenarios, including potential contracting of the remaining capacity [60] Question: Alberta power market pricing outlook - Management expects current pricing levels to continue, with a forecast of CAD 65 to CAD 70 per megawatt hour for the balance of the year [65] Question: Updates on Sundance Unit 5 and cost changes - The increase in costs is due to more precise estimates and the need for greater operational flexibility, which is seen as beneficial for the project [66][68] Question: Hydro segment performance and ancillary revenue - The hydro segment's performance was in line with expectations, and ancillary revenue was competitive despite some market challenges [73][75] Question: Future growth opportunities in Australia - The company is assessing renewable opportunities in Australia, focusing on solar and wind projects [88] Question: CCS and hydrogen integration into Sundance 5 - Management is considering CCS strategies for Sundance 5 but acknowledges the high costs associated with such technologies [99][100]