TransAlta (US:TAC)2025-11-06 17:00Financial Data and Key Metrics Changes - The company reported adjusted EBITDA of CAD 238 million, a decrease of CAD 77 million compared to the third quarter of 2024, primarily due to lower Alberta and Mid-C power prices and subdued market volatility [17][18] - Free cash flow for the quarter was CAD 105 million, down CAD 26 million year-over-year [20] - Average fleet availability was reported at 92.7% [6] Business Line Data and Key Metrics Changes - Hydro segment adjusted EBITDA decreased to CAD 73 million from CAD 89 million due to lower spot power prices and reduced ancillary services revenue [18] - The gas segment's adjusted EBITDA fell to CAD 110 million from CAD 141 million, impacted by lower realized power prices and higher carbon pricing, partially offset by the addition of Heartland assets [19] - The energy transition segment delivered adjusted EBITDA of CAD 28 million, a decrease of CAD 6 million year-over-year [19] Market Data and Key Metrics Changes - The average spot price in Alberta for the third quarter was CAD 51 per megawatt hour, down from CAD 55 per megawatt hour in 2024 [20] - The company realized benefits from hedging strategies, with approximately 2,500 gigawatt hours hedged at an average price of CAD 66 per megawatt hour, representing a 29% premium to the average spot price [21] Company Strategy and Development Direction - The company is focused on progressing its legacy thermal opportunities, including data center projects in Alberta and the Centralia project in Washington [6][7] - The Alberta restructured energy market (REM) is expected to enhance system reliability and provide better price signals for generators, with an anticipated increase in the provincial price cap [12][13] - The company aims to maximize the value of its legacy thermal energy campuses and pursue strategic M&A opportunities [26][27] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in achieving 2025 guidance despite tracking towards the lower end of the adjusted EBITDA range [6][25] - The company is optimistic about the data center opportunity in Alberta and its potential for economic growth [11][12] - Management highlighted the importance of regulatory clarity regarding the Clean Electricity Regulations and the Alberta government's commitment to developing a data center industry [60] Other Important Information - The company completed the sale of a 100% interest in the Poplar Hill facility and a 50% interest in the Rainbow Lake facility as part of the Heartland Generation acquisition [9] - The company announced the retirement of its CEO, effective April 30, 2026, with the current CFO expected to succeed him [15][16] Q&A Session Summary Question: What is driving the slower discussions regarding customers for the data centers in Alberta? - Management remains confident in progressing the data center opportunity, noting that it is a significant initiative requiring time to finalize details with multiple parties involved [33][34] Question: What is the timeline for moving from MOU to a binding agreement for the data center project? - Management aims to move quickly once the MOU is in place, with expectations for a faster timeline than the MOU process [38][39] Question: How is the company addressing the underutilized coal-to-gas conversion units in relation to phase two? - Management believes that underutilized generation can serve as incremental supply for data centers, emphasizing the importance of speed in meeting future energy needs [41][42] Question: What clarity is needed regarding phase two for finalizing agreements? - Management seeks clarity on the bringing-incremental-power concept and the role of legacy facilities in the context of phase two [72][73] Question: What are the expectations regarding federal policy changes and their impact? - Management is actively engaging with the federal government on the Clean Electricity Regulations and is modeling various scenarios for carbon pricing [64][65]