TransAlta (US:TAC)2026-02-27 17:00Financial Data and Key Metrics Changes - TransAlta reported Adjusted EBITDA of CAD 1.1 billion and Free Cash Flow of CAD 450 million, or CAD 1.73 per share, with an average fleet availability of 92.3% [4][18] - The company experienced lower power pricing in Alberta, which impacted its operating environment, leading to Adjusted EBITDA being at the lower end of expectations [4][18] - The total recordable injury frequency rate improved to 0.12 from 0.56 in 2024, surpassing the target of 0.37 [5] Business Line Data and Key Metrics Changes - The hydro segment generated Adjusted EBITDA of CAD 285 million, driven by lower spot and ancillary power prices [16] - The wind and solar segment delivered Adjusted EBITDA of CAD 338 million, a 7% increase compared to 2024, due to higher wind resources and contributions from Oklahoma wind assets [16] - The gas segment's Adjusted EBITDA decreased to CAD 438 million, primarily due to lower power prices in Alberta and higher operating costs [17] - The energy transition segment delivered CAD 100 million of Adjusted EBITDA, increasing year-over-year due to lower purchased power costs [17] Market Data and Key Metrics Changes - The average spot price in Alberta was CAD 44 per megawatt hour in 2025, down from CAD 63 per megawatt hour in 2024 [18] - The gas fleet captured an average price of CAD 66 per megawatt hour, a 50% premium to the average spot price [19] - The hydro fleet achieved an average realized price of CAD 58 per megawatt hour, a 32% premium to the average spot price [19] Company Strategy and Development Direction - TransAlta aims to advance its data center opportunity at Keephills, establishing a framework for phased development with CPP Investments and Brookfield [9][10] - The company is focused on maximizing the value of its legacy thermal sites while pursuing strategic M&A opportunities [27][28] - The board approved an 8% increase in the common share dividend, affirming the commitment to returning value to shareholders [7] Management's Comments on Operating Environment and Future Outlook - Management noted that Alberta's spot power prices are expected to remain under pressure, impacting the merchant portfolio [25] - The company anticipates Adjusted EBITDA for 2026 to be in the range of CAD 950 million to CAD 1.1 billion, with Free Cash Flow expected between CAD 350 million and CAD 450 million [24] - Management expressed confidence in the company's ability to fund growth opportunities through existing Free Cash Flow generation and incremental debt capacity [78] Other Important Information - TransAlta fully integrated Heartland into its operations, providing additional contracted cash flows and synergies [6] - The company completed its ERP system implementation on time and on budget, enhancing operational efficiency [6] - The acquisition of Far North Power is expected to add approximately CAD 30 million of average Adjusted EBITDA per year [12] Q&A Session Summary Question: Can you share more details around the data center opportunity? - Management indicated that specifics are limited due to MOU terms but emphasized the priority of speed to power and the expectation of definitive documents being completed within the year [32][33] Question: What are the terms of risk sharing in the MOU? - Management refrained from disclosing specific terms but expressed confidence in the commercial framework established with partners [34][35] Question: Can you provide an update on the M&A market? - Management noted that the M&A market remains active, with opportunities in both renewable and thermal generation assets [51][52] Question: What is the timeline for moving from MOU to binding agreement? - Management expects definitive agreements to be completed within the year, with ongoing engagement to finalize terms [57][58] Question: How will Alberta's interties with neighboring power markets influence the outlook? - Management is optimistic about the opportunities created by interties, particularly for load growth requirements in the Pacific Northwest and beyond [102]