TransAlta (US:TAC)2026-02-27 17:02Financial 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% for 2025 [5][19] - The company experienced lower power pricing in Alberta, with the average spot price dropping to CAD 44 per megawatt hour in 2025 from CAD 63 per megawatt hour in 2024 [19][20] - Free Cash Flow for the fourth quarter was CAD 93 million, CAD 47 million higher than the same period last year [17] Business Line Data and Key Metrics Changes - The hydro segment generated Adjusted EBITDA of CAD 285 million, while the wind and solar segment delivered CAD 338 million, a 7% increase compared to 2024 [17][18] - The gas segment's Adjusted EBITDA decreased to CAD 438 million due to lower power prices and higher operating costs [18] - The energy transition segment delivered CAD 100 million of Adjusted EBITDA, increasing year-over-year due to lower purchased power costs [18] Market Data and Key Metrics Changes - The Alberta spot power price averaged CAD 44 per megawatt hour in 2025, significantly lower than the previous year's average [19] - The gas fleet captured an average price of CAD 66 per megawatt hour, a 50% premium to the average spot price [20] - The hydro fleet realized an average price of CAD 58 per megawatt hour, a 32% premium to the average spot price [20] Company Strategy and Development Direction - TransAlta is focusing on advancing its data center opportunity at Keephills, with a memorandum of understanding (MOU) established with CPP Investments and Brookfield [10][11] - The company aims to maximize the value of its legacy thermal sites while pursuing strategic M&A opportunities [28][30] - The strategic priorities for 2026 include improving safety performance, delivering Adjusted EBITDA and Free Cash Flow within guidance ranges, and advancing the cold-to-gas conversion at Centralia [28] Management's Comments on Operating Environment and Future Outlook - Management noted that lower power pricing and subdued market volatility impacted the operating environment in 2025 [5] - The outlook for 2026 anticipates Adjusted EBITDA 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 [25][26] - Management expressed confidence in the company's ability to fund growth opportunities through existing Free Cash Flow generation and incremental debt capacity [80] Other Important Information - The board approved an 8% increase in the common share dividend to CAD 0.28 per share, marking the seventh consecutive annual dividend increase [8] - The company achieved record safety performance with a total recordable injury frequency rate of 0.12, significantly lower than the previous year's rate [6] Q&A Session Summary Question: Details on the data center opportunity and ramp-up expectations - Management indicated that speed to power remains a priority and that definitive documents are expected to be completed within the year [33][34] Question: Terms of risk sharing in the MOU - Management refrained from disclosing specific terms but emphasized the commercial framework's appropriateness [35][36] Question: Update on the M&A market and views on gas and renewable assets - Management noted that the M&A market remains active, with opportunities in both renewable and thermal generation assets [52][53] Question: Key gating items to move from MOU to binding agreement - Management stated that definitive agreements are expected to be completed within the year, with ongoing engagement with partners [59][60] Question: Funding capacity for upcoming projects - Management expressed confidence in the ability to fund growth opportunities through existing Free Cash Flow and various financial levers [80][81]