Earnings call transcript: Northland Power’s Q4 2024 results and 2025 outlook

Northland Power (OTC:NPIFF) (Market cap: $3.49B) reported its Q4 2024 financial results, showcasing a steady performance with an adjusted EBITDA of $312 million for the quarter and $1.3 billion for the full year, marking a 2% increase year-over-year. The company also provided guidance for 2025, projecting an adjusted EBITDA range of $1.3 to $1.4 billion. Trading at $13.39, the stock offers a compelling 6.31% dividend yield. According to InvestingPro analysis, the stock appears slightly undervalued based on its Fair Value metrics, with analysts setting price targets ranging from $16.04 to $24.41.

Key Takeaways

• Northland Power’s full-year adjusted EBITDA increased by 2% year-over-year.
• The company is advancing three major projects with a total investment of $16 billion.
• Northland Power’s development pipeline has expanded to 10 gigawatts.
• The company plans a $60 million investment in development for 2025.
• Northland Power maintains a strong competitive position with diverse energy projects.

Company Performance

Northland Power demonstrated consistent performance in Q4 2024, with adjusted EBITDA reaching $312 million. The full-year adjusted EBITDA of $1.3 billion reflects a 2% increase from the previous year. With an EV/EBITDA ratio of 7.51x and revenue growth of 6.8%, the company continues to benefit from strong global demand for renewable and natural gas energy, driven by trends such as electrification and decarbonization. InvestingPro data reveals a FAIR overall financial health score of 2.41, suggesting stable operational performance. Get access to 12+ exclusive ProTips and comprehensive analysis with an InvestingPro subscription.

Financial Highlights

• Full Year 2024 Adjusted EBITDA: $1.3 billion (+2% YoY)
• Q4 2024 Adjusted EBITDA: $312 million
• Adjusted Free Cash Flow 2024: $394 million ($1.53/share)
• 2025 Adjusted EBITDA Guidance: $1.3-$1.4 billion
• 2025 Adjusted Free Cash Flow Guidance: $1.3-$1.5/share

Outlook & Guidance

Northland Power has set ambitious goals for 2025, with adjusted EBITDA guidance ranging from $1.3 to $1.4 billion. The company is focusing on project execution and exploring refinancing options for its offshore wind assets. Additionally, Northland Power plans to invest $60 million in development projects in 2025, with an Investor Day scheduled for fall 2025 to outline strategic priorities.

Executive Commentary

Christine Healy, President and CEO, emphasized the importance of energy that is "affordable, reliable, secure, and clean." She also highlighted the need for adaptability in changing political environments and expressed confidence in the company’s ability to enhance shareholder value through its development pipeline.

Risks and Challenges

• Political instability could impact operations and project execution.
• Potential tariffs in the US market may affect cost structures.
• Recontracting challenges, particularly in Germany, could influence revenue streams.
• Market saturation in renewable energy sectors may limit growth opportunities.
• Supply chain disruptions could delay project timelines.

Northland Power’s Q4 2024 results and 2025 outlook reflect a stable and strategically focused company, poised to capitalize on growing energy demands while navigating potential challenges in the global market landscape. With a healthy current ratio of 1.17 and strong analyst support, the company maintains a solid financial foundation. Dive deeper into Northland Power’s comprehensive financial analysis with InvestingPro’s detailed research report, part of our coverage of 1,400+ top stocks.

Full transcript - Nuveen Premium Income Municipal Inc (NPI) Q4 2024:

Conference Operator: Welcome to the Northland Power Conference Call to discuss the Fourth Quarter twenty twenty four Results. As a reminder, this conference is being recorded on Thursday, 02/27/2025, at ten a. M. Eastern. Conducting this call for Northland Power are Christine Healy, President and CEO John Brace, Chairman and Adam Beaumont, Interim Chief Financial Officer.

Before we begin, Northland’s management has asked me to remind listeners that all figures presented are in Canadian dollars and to caution that certain information presented and responses to questions may contain forward looking statements that include assumptions and are subject to various risks. Actual results may differ materially from management’s expected or forecasted results. Please read the Forward Looking Statements section in yesterday’s news release announcing Northland Power’s results and be guided by its contents when making investment decisions or recommendations. The release is available at www.northlandpower.com. I will now turn the call over to Ms.

Christine Healy.

Christine Healy, President and CEO, Northland Power: Good morning. Thank you very much and thank you to everyone for joining today’s call. So in our discussion today, I will provide an update on our business, the progress we’ve made on construction and our focus areas for 2025. Adam Beaumont will walk through our twenty twenty four fourth quarter and full year results and our newly issued 2025 financial guidance, which was released yesterday. And then John Brace will join us as well to take your questions.

Before we get into details though, I want to reiterate and emphasize the paramount importance of health and safety across all of Northland’s business and all of our operations. We strive to ensure all individuals working across our company and for our company are kept safe because safety is a core value for Northland. So I’d like to take a moment to introduce myself as Northland Power’s new President and CEO. Since I joined the company on January 20, I have been energized by the talent of the Northland team and the incredible work we’re doing around the globe. It’s been a very busy first month.

And for those of you I have not yet had the opportunity to meet and connect with, I look forward to doing so. And I will share with you now some of the things that attracted me to join Northland. So fundamentally, we live in a world that needs energy and that energy needs to be affordable, reliable, secure and clean. And Northland has a very strong reputation as a world class energy player, a proven track record in project origination, development, execution and operation. This company knows how to deliver projects around the world and these are projects for which the demand picture is exceptional.

So with a global and diverse energy portfolio, including offshore wind, onshore wind, solar, battery and natural gas, Northland is growing and we are well positioned to take advantage of future profitable growth opportunities. I was personally really attracted by Northland being one of the few Canadian energy companies operating and succeeding in international markets. In fact, this global diversification is one of the reasons that Northland is unaffected by the threat of U. S. Tariffs, as I’m sure some of you will have questions about.

Financially, we are in a strong position. We have a highly contracted revenue base, over 2,300,000,000 in revenues, available liquidity of over $1,000,000,000 and we’re one of the few power producers with an investment grade balance sheet. I have personally spent decades in the energy sector and I have a lot of passion for energy. And I’m aligned with Northland’s values and how we deliver. I bring with me a proven track record of leading teams across continents, increasing shareholder value and delivering multibillion dollar infrastructure projects.

And I’ve been fortunate through my previous executive roles, including at global energy companies like TotalEnergies (EPA:TTEF) and Maersk and Atkins Realis that I have led businesses growing across diverse markets. I also currently sit on the Board of Directors for Canadian Natural Resources (TSX:CNQ), one of Canada’s largest energy corporations. I look forward to leveraging my experience here at Northland as we work to build on the strong foundation that has been built over many decades in this country in this company. So since joining, my focus has been on getting to know our people. So our shareholders, our stakeholders, our partners, our employees, and I’ve also been on a bit of a worldwide tour visiting our operations.

Just recently, I spent time in Europe and in Asia, and I met with some of our world class joint venture partners, including Mitsui, Gentari, Orlin, ESB. I visited some of our offshore construction sites. I met with our teams. I dove into what we are doing to advance these projects. I met our operational teams in Europe, our technology center in Europe.

I was really impressed by what I saw. It’s been a busy and enlightening month, and I’m pleased by the quality, the dedication of our teams and the commitment to safety across all of our operations. So I’ve started working closely with our senior management team to refine our strategic priorities. We will be holding a planning session with our Board this June, and I look forward to sharing the outcomes with you at our upcoming Investor Day anticipated for the fall of this year, and we can provide more details on our long term strategic priorities and targets at that time. I will note though that I walk into an opportunity rich environment here at Northland with a team who have proven that they can deliver time and again.

So I’m excited about the opportunities ahead of us. With increasing global energy demand, this company is well positioned to lead and to seize upon opportunities across multiple technologies and geographies. Near term though, our focus is on project execution. As you know, we have three large projects reaching advanced stages of construction, and we will see significant milestones in 2025, so stay tuned for that. I was pleased to be in Poland and celebrate with the team at Baltic the installation of the first monopile.

So these are real milestones happening right now in these projects and it’s Northland teams delivering on that. I can also update you on our search for a permanent CFO. We’ve been working with an executive recruitment firm and that process is progressing well. We hope to make an announcement in the coming months. So maybe I’ll take a couple of minutes to talk about some of our 2024 achievements.

As we continue to deliver on our commitments, we are satisfied with the full year results. We hit the high end of our financial guidance. And looking ahead, we are rolling out our 2025 financial guidance, and Adam is going to discuss that in some more detail shortly. But on our three construction projects totaling $16,000,000,000 in investment and 2.4 gigawatts to Northland and its partners, these projects continue to advance. Hai Long, Baltic Power offshore wind projects and Oneida, one of Canada’s largest battery storage projects are continuing according to plan.

Oneida is expected to start operating in just a few months, which is exciting. So I’ll start with Hai Long, our one gigawatt offshore wind project in Taiwan, where we have made good progress. Manufacturing of all the pin piles is complete. Half of the offshore wind turbine jacket foundations have been installed. Half of the turbine generators and blades are complete and the supplier is progressing well with nacelles and towers.

Of the two nineteen pin piles, 111 have been installed and more than half of the wind turbine jacket foundations are also in place. All offshore substation foundations are installed, one topside is in place and coal commissioning is complete. Two out of four export cables have been installed and the investigation at the onshore substation is complete with safe energization expected in the coming weeks. In water construction is set to resume per the winter schedule. Turbine installations and first power are expected in the second half of this year.

The project remains on track to achieve full commercial operations by early twenty twenty seven. So then I move to Poland and our 1.1 gigawatt Baltic Power offshore wind project, which has also made strong project progress. Major in water construction activity began earlier this year. We installed our first turbine monopile foundation. And as I mentioned earlier, I was there to celebrate and enjoyed some cake with the team.

Work on the offshore substation’s main structure is underway. Looking ahead, progress continues on the fabrication of onshore and offshore substations, foundations, export cables, turbine components and inter array cables. The project remains on track to achieve commercial operations by the end of twenty twenty six. Then I’m going to turn to Oneida, our large battery storage project in Canada, and I’m pleased to share that we’re in the final stages of this project. With all major activities completed, commissioning is now underway and we’re on track to meet our 2025 operational date in the coming months.

Oneida is our first commercial scale battery energy project in Northland, and I’m proud of our tremendous performance on this project. This accomplishment highlights our robust capabilities and our track record of delivering projects as planned. I think our success at Oneida paves the way for future opportunities and enables us to leverage our expertise in battery storage across other jurisdictions. As you know, we are also progressing with our second battery storage project in Alberta, and I’ll talk about that more in a moment. Collectively, once complete, our three construction projects, High Long, Baltic and Oneida will contribute approximately $600,000,000 in adjusted EBITDA and $200,000,000 in free cash flow to our business.

As we look ahead, we’re identifying new opportunities in our core markets and we’re advancing our 10 gigawatt development pipeline. For 2025, we plan to invest $60,000,000 in development. We remain committed to pursuing profitable projects and we continue to see strong opportunities across our pipeline to enhance shareholder value. In our onshore renewables business in Alberta, our 80 megawatt two hour Jurassic battery storage project is progressing. The EPC contractor and battery supply contracts have been signed and the project is advancing to financial close in the coming months.

In Ontario, we’re reviewing the new LT2 procurement guidelines and we believe that we could bid multiple technologies into that auction process. In our offshore business, our early stage 2.4 gigawatts Scottwind offshore project continues to progress. We continue to see and seek attractive investment opportunities in our core markets such as the Baltic Region and in areas where governments are increasing efforts and showing strong interest in procuring renewable energy. I do want to spend a quick moment to address some questions that have come up regarding some announcements by the new U. S.

Administration, particularly around potential tariffs on Canada and changes to renewable power incentives. As many of you may know, Northland made the strategic decision not to enter The U. S. Offshore wind market, and therefore, we have no exposure to the executive orders relating to offshore wind development. Our current U.

S. Onshore exposure is limited to two twenty megawatts of operating wind power in New York State. We continue to look at additional opportunities within our New York onshore development pipeline as we see these as good potential investments for the future. In terms of potential tariffs, if they are imposed on Canada, we believe they would have minimal impact on our business due to our international diversification, our access to a global supply chain and our development pipeline largely outside of The United States. I will also note that despite any political shifts that may happen around the world, the fundamental demand for power remains high and renewable energy will continue to dominate new installations.

Renewables and natural gas are the best positioned technologies to meet this growing demand and Northland scale, geographical reach, capabilities and technology mix position us to deliver on that need. Drivers like data centers, reshoring, electrification, decarbonization, all of these fuel the growth. And we see that in Canada with our largest grids Ontario, Quebec and Alberta revising long term demand forecasts upwards. But we see that in our markets around the world. The demand for power remains strong.

And new natural gas generation alongside renewables will be essential into the future. Geopolitical factors frankly are something we cannot control. And when we invest in energy, we’re essentially investing through the cycle. Political stability is important to everyone, but of course, changes in the political environment do happen, and we must remain adaptable. That’s why we focus on developing good projects with robust execution so that these projects are profitable throughout changes in the cycle.

We’ve seen some depressed valuations for power energy companies, including Northland, and there is some macro environment noise and sentiment. But the market fundamentals remain strong, and our ability to originate, develop, construct and operate profitable projects around the world sets us apart. Recently, we’ve observed some significant transactions in the renewable energy space that demonstrates a dislocation between private and public market valuations. This is a testament that power infrastructure is valuable and we see the strong fundamentals. And I think we can see through the strong fundamentals to a strong future for the company.

In response to what we believe to be an undervalued Northland share price, Adam will talk in a few minutes about our amended dividend reinvestment program or DRIP, where we are removing the discount and we are reverting to market purchases to reduce dilution for our shareholders. And Adam will talk about this some more. We’re confident in Northland that we’re well placed to benefit from market trends and we can leverage our competitive advantages to capture and deliver profitable opportunities. You can also see in our portfolio that owning power generation infrastructure continues to be valuable. As our existing contracts expire, we have the option to recontract and typically we have no debt obligations remaining on our assets.

Because we’re a good operator, we can deliver solid revenue streams from these assets for years to come. Before I turn it over to Adam, I also want to address a topic that’s been on some investors’ minds according to some of the discussions we’ve been having, and that’s Northland’s dividend policy. The Board of Directors reviews the dividend policy regularly as part of our overall capital allocation strategy. Northland’s Board and management understand that the dividend is important to many of our shareholders, and our current plan is to maintain the dividend at current levels. Our asset base is strong and our expected cash flow is sufficient to cover the dividend and support our planned growth.

In addition, we have three large construction projects coming online over the next few years that provide additional material cash flow. Our value proposition remains based on our strong capability and our track record and our ability to capitalize on large power growth opportunities. We have technological diversification, including the ability to develop, construct and operate offshore wind, onshore solar, onshore wind, battery storage and natural gas power infrastructure globally. We have an existing presence in North And South America, Europe and Asia. I would also say one of our key parts of the value proposition is our people.

We have people who know how to originate, develop, construct, deliver and operate power infrastructure globally, and it’s a key ingredient for our success.

Adam Beaumont, Interim Chief Financial Officer, Northland Power: And finally, of course, the market fundamentals I’ve already mentioned. Power demand is here to stay and Northland is ready to capitalize on it. So with that, I’ll turn things over to Adam, who can provide a more detailed update on the financials. Adam? Thank you, Christine, and good morning, everyone.

We are pleased with our 2024 operating results, which achieved the higher end of our financial guidance. These results reflect the strength and stability of our business through global and technological diversification and are a testament to our track record of successfully and effectively operating our projects, while also delivering on our construction commitments. During the fourth quarter, we generated adjusted EBITDA of $312,000,000 While on its face, this was a decrease compared to last year. But as you will recall, it was largely due to the one off gain recognized on the Hailong partnership with Gentheri late in 2023. I wanted to quickly note a couple of highlights for each of our business units during the quarter.

For offshore wind, the wind resource was good, but lower than last year, which featured a historical high in the fourth quarter of twenty twenty three. The German wind farms experienced lower unpaid curtailments this quarter due to a lower number of negative pricing events. And in November, there was a ten day unplanned outage from the grid operator to perform system upgrades, which impacted one of our German wind farms. Onshore renewables results were also strong with higher wind and solar resources at our Canadian and New York assets and favorable band adjustment revenue in Spain. For our natural gas facilities, this quarterly results were largely in line with those in 2023.

In November, it’s worth noting that we successfully completed the 23 megawatt capacity expansion at our Thorold Natural Gas facility in Ontario. The $40,000,000 upgrade was completed on time and on budget funded with project level debt. If you recall, in 2023, we signed an agreement to increase the capacity of the facility and extend our revenue contract by five years until 02/1935. This extension is conditional upon the successful completion of upgrade tests scheduled for later this year, which we expect to achieve. This upgrade will add more cash flow and demonstrate our technical abilities or continues to demonstrate our technical capabilities in natural gas and the post PPA value in our high quality assets.

Ipsa, our Columbia utility saw improved results primarily due to the combination of its regulated growing regulated asset base and rate escalations, which effectively provide us with protection against inflation. On a full year basis, adjusted EBITDA was $1,300,000,000 representing a 2% increase compared to last year. This was primarily due to higher wind resources over the course of the year, a full year contribution from our two New York wind assets, which came online late in 2023 and lower disciplined spending on early stage development activities as we had planned and previously communicated. During the fourth quarter, we generated adjusted free cash flow of $81,000,000 and free cash flow of $58,000,000 On a per share basis, this resulted in $0.31 and $0.22 respectively in the fourth quarter. On a full year basis, we generated adjusted free cash flow of $394,000,000 and free cash flow of $328,000,000 in 2024 or $1.53 and $1.27 per share respectively.

Turning to our 2025 financial guidance that we introduced yesterday, we expect 2025 adjusted EBITDA to be in the range of $1,300,000,000 to $1,400,000,000 an increase of approximately $100,000,000 from last year. This increase is largely driven by the first cash flows from our growth projects currently under construction, including the Hai Long pre completion revenues, which are expected to start in the second half of this year and the Oneida facility, which is expected to achieve commercial operations in the coming months. As a reminder, pre completion revenues are used to fund construction costs for Hai Long until full commercial operations is achieved. This revenue will only be included in our adjusted EBITDA, but not in our cash flow metrics. Factors expected to offset the increase are lower band revenue adjustments in Spain from lower posted regulatory prices and lower planned contributions from the North Sea 1 offshore wind project following a scheduled step down in its PPA price from 194 to 154 per megawatt hour.

We expect 2025 adjusted free cash flow to be $1.3 to $1.5 per share. When compared to 2024 actual adjusted free cash flow for 2025 will benefit from higher contributions from our natural gas facilities and EBSA as well as lower net debt service and taxes. The Oneida project coming into service in 2025 as I already mentioned. This will be offset by a couple items already mentioned and lower cash flows resulting from the gain on the sale of the La Lucha, Mexico asset and its partial year of operations in 2024. Our free cash flow guidance is expected to be $1.1 to $1.3 range, which assumes $60,000,000 of development expenses.

I do want to highlight that we continue to disclose both adjusted free cash flow and free cash flow metrics. Our free cash flow metric is different from how our peers report including growth expenses. Going forward, we will place more emphasis on adjusted free cash flow as it represents the best metric of Northland’s ability to generate cash flow from our operating business before any investment related decisions are made, such as development related activities. Development expenditures are an important aspect of our business. However, the benefit is not typically realized for several years and the level of spending may differ year over year.

Turning to our three construction projects, which continued to progress well as Christine noted earlier, the capital spend in the fourth quarter was approximately $1,000,000,000 which leads to $8,000,000,000 to date. This marks 50% of the total $16,000,000,000 of total expected project costs for those three projects. As Christine alluded, turning to our share price, while it has been encouraging to see an increase over the past couple of days, we still believe our current share price does not reflect the true long term value of our business. In response, we have announced two changes to our DRIP program, which will take into effect with the April dividend payment. We continue to offer the DRIP to shareholders, but have eliminated the discount and will begin sourcing DRIP shares via market purchases instead of from treasury because we believe it is prudent to minimize dilution for our existing shareholders.

We are confident in the strength of our balance sheet, the status of construction and have multiple funding tools available to deliver on our disciplined growth strategy in core markets. In terms of funding our future disciplined growth in core markets, I would like to comment on a couple areas. First, our investment grade balance sheet remains strong with available liquidity of $1,100,000,000 Second, as the three construction projects come online that will provide us with an incremental approximately $200,000,000 annually Third, as we add new growth projects, those projects will provide further contributions as well as incremental debt capacity to pursue more opportunities. And finally, we have more funding tools multiple funding tools available such as project level refinancings and asset level recycling that can provide incremental capital. We continue to advance on our development pipeline overall.

To summarize, we are pleased with our 2024 results and see 2025 as another exciting year for us given the number of milestones that we expect to achieve as we further de risk construction projects and secure new growth. With a strong balance sheet and robust liquidity position, we are well positioned to fund our program of growth while executing on construction. I will now turn the call over to John for a few final remarks.

John Brace, Chairman, Northland Power: Thank you, Adam, and good morning, everyone. This is my last conference call as I have returned to the non executive Chair of the Board position. It has been a pleasure serving Northland as Executive Chair and Interim President and CEO over the past eleven months. We have continued to position the company for the future and I look forward to Christine’s leadership as President and CEO for many years to come. Christine is a highly accomplished leader with a strong strategic acumen who has a fantastic track record of managing teams and producing successful results over multiple continents and multiple years.

The Board and I are very excited to have Christine with us. And I can tell you in our opinion, Christine’s first month have been nothing but spectacular. I want to thank all our stakeholders who I’ve interacted with during my time back in management of Northland. I’m excited about the future of Northland. And as Christine said, our global and technological diversification, our focus on long term contracted profiles and financial stability, position the company well for growth for many years to come and to withstand any short term political or regulatory shocks that we find ourselves in.

This concludes our prepared remarks. I will now turn the call over to the operator. Operator, please open the line for questions.

Conference Operator: Thank And our first question comes from Mark Jarvi of CIBC (TSX:CM). Your line is open.

Mark Jarvi, Analyst, CIBC: Thanks. Good morning, everyone. Adam, I just want to pick up on your comments around the balance sheet and funding tools. You talked about project refinancing. Just updated views in terms of the two offshore wind projects, Baltic Power and Hai Long in terms of expectations around potentially amending the debt down the road.

Is that something that’s still contemplated in your comments? Would that be to optimize free cash flow from those assets or potentially draw out some cash that can go into future growth?

Adam Beaumont, Interim Chief Financial Officer, Northland Power: Yes. So as we’ve done in the past, as I think, remember on the three operating offshore projects, we were able to once the projects have achieved commercial operations and been primarily derisked, able to refinance. I mean, obviously it will be dependent on market conditions at that point in time, but that is something that we would definitely look to be as a toggle and have actually kicked off a mini working group already to evaluate what the different options are. So that is just one of the tools that we would be looking forward to augment our liquidity in addition to other areas of the business.

Christine Healy, President and CEO, Northland Power: And Mark, I guess I’d add to that to just say and thanks for the question. It’s just if the message I can pass along is just we’re continually looking at ways that we can optimize. And this is another example of if there’s an opportunity there to optimize, then we will. But and we have to continually keep a watch on that to see when the opportunity is there so that we can improve the overall picture for the business and that we can, of course, then have more liquidity and more flexibility to develop our future projects. So we like the picture right now, but anytime there’s an opportunity to improve it, then of course we’re going to take that.

Mark Jarvi, Analyst, CIBC: And just Adam, if the working group started already, that’s something then you think that you could actually complete shortly within the post COD period, so like sometime in 2027?

Adam Beaumont, Interim Chief Financial Officer, Northland Power: It will really depend on the market conditions at that time if that’s the right opportunity, but that would be the next logical step at this point.

Mark Jarvi, Analyst, CIBC: Okay. And maybe, Kristine, this question is for you. Just in terms of your perspective now on the offshore wind business, you’ve been out to visit these projects, you’ve been able to spend some time thinking through the complexity of them. Just thinking about future cap allocation, if you had two projects that sort of meet your return hurdles, would you be willing to do two projects at the same time as you embarked on now? Or would it be sort of a preference to maybe just do one large offshore wind project at a time and spread that capital over to onshore projects and thermal projects?

I’m just kind of understanding how you’re thinking risk and sort of capital allocation around large projects?

Christine Healy, President and CEO, Northland Power: So Mark, I think it’s a good question and it’s one that we’re having a close look at. I will say because we have this really strong capability in offshore wind and the reality is that the world needs offshore wind. So it’s just obviously a bit of a no brainer that we should continue to do the things that we’re good at and that we deliver well on. In terms of the mix, there’s a few more levers I would say in that. It also depends on the stake that we take in those projects, right?

Because we might decide to take a smaller stake in more projects or we might decide to take a bigger stake in fewer projects. So there’s a few moving pieces there as we look at what the future constellation of projects is for Northland. And because we’ve developed, I think, a really good track record with some world class partners, we have the flexibility and the capability to be able to do that. So that’s it’s nice from my perspective that we have that additional flexibility and another lever to look at when we’re looking at the future composition and sort of risk profile.

Nelson Ng, Analyst, RBC Capital Markets: And just building off that

Mark Jarvi, Analyst, CIBC: in terms of partnerships, your first impressions in terms of how the partnership with Orland has gone, prior comments have been that it’s gone quite well and that you guys would think to do more with them if that opportunity presented. Do you share that same view now that you’ve been able to meet that their side in terms of the partnership at Baltic Power?

Christine Healy, President and CEO, Northland Power: One hundred percent. I have to say, really productive meetings with Orlin. I like working with them. I think our teams have a really good working relationship and then that’s zippered up all the way through to the top of the house. And then I would say our other partners as well.

I mean, I really was I think when my travels around, that’s the thing I came away with such a positive view on is that we have very strong relationships with these world class companies and I would happily do more business with any of them.

Mark Jarvi, Analyst, CIBC: Okay. Thanks for the comments. I’ll go back in the queue here.

Conference Operator: Thank you. Our next question comes from Sean Steuart of TD Cowen. Your line is open.

Sean Steuart, Analyst, TD Cowen: Thanks. Good morning, everyone. Christine, following up on your comments with regard to optimizing the current portfolio, any thoughts on potential non core asset sales? And is that timing, would that at all be dependent on managing through the higher payout ratio that you’re going to have the next couple of years as you work through the construction period? Would that impact the timing of any potential divestitures as you look at those optimization opportunities?

Christine Healy, President and CEO, Northland Power: So Sean, thanks for the question. I appreciate it. So I would say first off that it’s part of my job all the time every day to look at optimizing the portfolio. So that’s if I’m not doing that, then I think you have every right to say something about it because that’s I just we need to be doing that all the time. So we continue to do that and that’s so every day, that’s part of the consideration.

The timing of anything that we do is going to be guided by what makes the most sense for the business and delivers the best value for shareholders. So I think we’re in a financial position right now where we’re comfortable that we’re going to be able to meet all of our obligations. So that means that we have the benefit that we can make strategic decisions and do them on the timelines that make the most sense for us to be value accretive for everyone.

Sean Steuart, Analyst, TD Cowen: Okay. Thanks for that. And with respect to the prospective pipeline, you gave us lots of context around, I guess, bigger line of sight on Jurassic and some of the other opportunities you’re hoping to advance.

Benjamin Pham, Analyst, BMO: Can you speak to the cadence of

Sean Steuart, Analyst, TD Cowen: how you expect to roll out future development opportunities? And you touched on it with Mark’s question with respect to comfort balancing to offshore wind projects potentially simultaneously, but broader thoughts on comfort with cadence of the investment profile going forward as you bring this prospective pipeline to fruition?

Christine Healy, President and CEO, Northland Power: So I think the cadence and I would say the mix of what the future development pipeline looks like, in an ideal world, we would be able to pick all of the timing and I would be able to write that out on a piece of paper and we would do that exactly in sort of a planned way. The reality is that we also have to be responsive to opportunities and market conditions. And the big lever in a lot of these projects is as well the regulatory approval process and the timelines for that are different in pretty well every jurisdiction. So while I would like to say that we have perfect control over that, the reality is that we don’t and that’s part of the reason why we build strong partnerships and we try to build a pipeline that is able to withstand sort of changes in the timelines as we go through that process. I think the overall picture for me then ideally is a mix of onshore and offshore battery and some gas so that we stack these things up maybe in a less pancaked way than we are right now.

And so I think if I had my druthers, that’s what I would like to see. I think that we have the opportunity to do that. We’ve got a robust portfolio. We’ve got a lot of opportunities in front of us. And so I’m actually excited about that for the future.

I also just practically speaking, we have some really great project people that I want to make sure are motivated, engaged and delivering on future projects for us. So I want to make sure that that those folks really get to continue delivering on all the things that they’re so great at.

Sean Steuart, Analyst, TD Cowen: Okay. That’s all I have for right now. Thanks very much.

Conference Operator: Thank you. And our next question comes from Rupert Marrero of National Bank. Your line is open.

Rupert Marrero, Analyst, National Bank: Hi, good morning everyone and congratulations on the new role, Christine. Maybe if I could start, Adam, with you. You gave us your guidance projections for 2025. Can you walk us through some of the high level assumptions behind the guidance? For example, what are you modeling on production versus the LTA or curtailment of production into twenty twenty five?

Adam Beaumont, Interim Chief Financial Officer, Northland Power: Yes, I think it’s pretty standard practice from how we’ve done guidance in the past. I mean, ultimately we revert to LTA in terms of production unless there is known outages that the grid is providing or elsewhere. We did increase our small assumption on the curtailment side for this guidance here, but otherwise it was pretty standard to how it’s been in the past.

Rupert Marrero, Analyst, National Bank: Okay. Very good. And Christine, you mentioned the dislocation between private equity and public valuations. And we have seen some consolidation from private equity recently of some of your public market peers. Now we’re seeing the pendulum swing here on valuations and we’re probably back to the same place we were eight years ago when Northland did its strategic review.

With the opportunities that you have, you talked about refinancing, maybe asset recycling. Are you confident that Northland can remain competitive through to the next cycle given your financing opportunities, remain competitive on a cost of capital? And I’m wondering if you can just give some more color maybe not just Christine, but the whole team there on the evolution of this dynamic and what are your forecasts for where we’re headed?

Christine Healy, President and CEO, Northland Power: Thanks, Rupert. I appreciate the question. And I’ll start by saying, yes, I’m very confident in our ability to deliver into the future. And one of the main reasons that I can say that and say that with even more confidence now after going around and meeting the teams is that we have a real ability to execute on projects. And fundamentally, the value from these projects comes when they’re actually constructed and delivered and operated.

And that is what this company has shown time and time again it can do. So lots of ideas that are written down or talked about or put on pieces of paper don’t actually result in any electrons and improvement of the overall energy mix. But this company does that and does it exceptionally well. And I think the market is going to see that. And I think certainly as we go forward with our projects, we’re continuing to demonstrate it again and again.

So for me, I think the future is really good for us.

Rupert Marrero, Analyst, National Bank: The public market peer group has been consolidating significantly. Do you see increased interest or activity levels coming from some private equity partners?

Christine Healy, President and CEO, Northland Power: So I will say, I can’t really speak to that because my focus has been on our operations and on delivering on our projects. So to me, we keep delivering and the market is going to reward that.

Rupert Marrero, Analyst, National Bank: Very good. I’ll leave it there. Thank you.

Conference Operator: Thank you. Our next question comes from Nelson Ng of RBC Capital Markets. Your line is open.

Nelson Ng, Analyst, RBC Capital Markets: Great. Thanks and good morning everyone and welcome Christine. And John, it was great having you on the calls for the past year and touching base. So first question just relates to the DRIP. So obviously, it’s the right choice to remove that dilution of your DRIP by purchasing shares on the open market.

But what are your thoughts in terms of kind of expanding that a bit more and doing stock buybacks or starting an NCIB program? Obviously, cash flows are a bit tight for the next two years, but you obviously have the liquidity to do some buybacks or do more buybacks?

Adam Beaumont, Interim Chief Financial Officer, Northland Power: Yes, Nelson. Reflecting on the share price, like we think that the drip change is a good step to signal to create value for shareholders overall. As you know, it was providing some liquidity, which we think continuing the DRIP program going forward, but at a market level makes more sense. In terms of doing anything else like an NCIB program, it’s something that we’ll continue to monitor the share price and evaluate. But at this time, we see a lot of value in focusing that capital in projects as Christine was alluded to, which will drive material value for the company over the long term.

Nelson Ng, Analyst, RBC Capital Markets: Thanks, Adam. And then a quick one on your 2025 guidance. So I think the guidance was for an additional $20,000,000 of EBITDA from onshore renewables excluding Spain. Is that mainly from just higher generation from existing assets or is there something else more than that?

Adam Beaumont, Interim Chief Financial Officer, Northland Power: Yes, that’s correct. Like the a couple of the assets had so or not hitting their LTAs for 2024 and there will be the return on that side, which makes up the most of that difference.

Nelson Ng, Analyst, RBC Capital Markets: Okay, thanks. And then just one last question, I think, Kristine, you’ve got to start going.

Adam Beaumont, Interim Chief Financial Officer, Northland Power: Nelson, sorry to jump in. Just Oneida obviously would be part of it. It’s not in the $20,000,000 number, but it would be incremental as well as we expect that to come online in the early part of the year.

Nelson Ng, Analyst, RBC Capital Markets: Okay. Thanks for that. And then in terms of the impact from tariffs from the potential tariffs are minimal. So I just want to clarify for the Jurassic battery storage project, where I guess the financial close is coming in the next few months, then construction will start at that time as well. Will any equipment be sourced from The U.

S. Or will most of the materials be domestic? And I presume batteries are coming from Asia rather than The U. S?

Christine Healy, President and CEO, Northland Power: So all of our contracts are in place for Jurassic BEST (NYSE:BEST). So we have no exposure on the tariff side related to the construction phase. In terms of the supply chain, I’m looking across it, Adam. I had a recent briefing on the project, Nelson, but I’m not going to pretend that I have the right answers at my fingertips there. Do you have it, Adam?

Adam Beaumont, Interim Chief Financial Officer, Northland Power: In terms of the impact of the The suppliers where we’re getting the batteries from? I don’t believe so, but we can double check.

Christine Healy, President and CEO, Northland Power: Yes, we can get back to you on that. But I did confirm in the recent project briefing that we have no tariff exposure the way that we’ve contracted and structured that we’re well covered.

John Brace, Chairman, Northland Power: John? Nelson, just to add to that, our supplier is directly from Asia. And I think we’ve been public in the past about the supply agreement includes an allowance for tariffs should tariffs be imposed by Canada that we believe this is sufficient to cover whatever tariff eventuality there is. But beyond that in our capital budget for the project, we’ve made additional allowances for tariffs. So I think we’re going to find ourselves pretty well covered and probably coming out better than we expected.

Nelson Ng, Analyst, RBC Capital Markets: Okay, great. Thanks, John.

Conference Operator: Thank you. And our next question comes from Robert Hope of Scotiabank (TSX:BNS). Your line is open.

Nelson Ng, Analyst, RBC Capital Markets: Good morning, everyone. Maybe a question on the development pipeline through the lens of discontinuing the diluted DRIP. When we think about kind of the next phase of growth, should we assume then the capital requirements are going to be much more in that kind of 2027, ’20 ’20 ’8 timeframe, where you’ll have the offshore cash flows coming in and you won’t require kind of that incremental cash flow from the DRIP?

Adam Beaumont, Interim Chief Financial Officer, Northland Power: I mean, Rob, as you know, right now we have $1,100,000,000 of liquidity available and that cash flow will actually start coming in this year in 2025. So I wouldn’t say that it’s all wait until the back end there. We will have some capacity over the near term as well.

Nelson Ng, Analyst, RBC Capital Markets: Okay. Appreciate that. And then maybe, Christine, you’ve spoken quite a bit about the attractiveness of offshore investment, onshore investment in batteries and natural gas. You’ve been a little silent on the utility side of the business. So how do you think about that?

And is that an area that you want to put more capital in to that existing asset or maybe even future assets at a later date?

Christine Healy, President and CEO, Northland Power: I’m happy to get a question about the utility side of the business. They’re a little bit the unfun heroes. I mean fundamentally, this is part of how we can be really good operators. The fact that the utility side of the business performs very well, that it’s a great training ground for people in our organization. So I think actually it’s very complementary to the overall portfolio.

And it’s back to our strategy is that we develop these projects and then we’re a long term operator of them. So having existing operations in our utility based business just aids in sort of growing our skill set in that. So I like that part of our business. I think that we do it well. What the shape of that is in the future, I think again, the conversation is that we’re always looking at what’s the best way to optimize the portfolio and where are we heading in the future.

I think I’ll be able to give you a bit more color on that when we do our Investor Day in the fall.

Nelson Ng, Analyst, RBC Capital Markets: Look forward to it and congrats on the new role, Christine. And John, it’s been a pleasure over the past year. So thank you, Paul.

John Brace, Chairman, Northland Power: Thank you, Rob.

Conference Operator: Thank you. And our next question comes from Benjamin Pham of BMO. Your line is open.

Benjamin Pham, Analyst, BMO: Hi, good morning. On your development backlog, the 10 gigawatts, there’s a one gig addition on the nat gas Canadian side. Can you clarify, was that in the backlog before? How do you see that transitioning in the years ahead? And do you think that the nat gas offers the best returns in your backlog right now?

John Brace, Chairman, Northland Power: Ben, maybe I’ll try to give an answer to that. It’s only last year, partway through the year that we made an explicit decision that we would pursue natural gas projects with speed and significant effort. So that was not really been in our backlog in prior years to my knowledge in a significant way. We’re excited about natural gas. As you know, that was almost the genesis of Northland Power.

We’ve built up significant experience over the years. Our natural gas fleet is actually smaller than it was not that many years ago. And we have a very motivated team of natural gas experts who are, I’ll use the word again, excited in developing new opportunities for our plant. It also ties in very well with what I think, Christine was alluding to, which is the realities of the energy world and the energy market needing not only renewables, but needing natural gas in order to satisfy demand and support a stable grid. So we’re looking forward to success in natural gas on into the future.

Benjamin Pham, Analyst, BMO: Okay. Thanks for that, John. And may just switch in the North Sea. You mentioned the step down. I’m wondering next, how should we think about the recontracting discussions?

When do they need to start and the path ahead and the potential counterparties that you could be potentially discussing with?

Christine Healy, President and CEO, Northland Power: So thanks for the question. And the recontracting, we’re very proactive on that. So we’ve in fact been in the market and we’ve had a process that’s been ongoing. We’re seeing really positive results from that. So more to come in the future because that’s ongoing.

So I can’t really talk more about it right now. But certainly, that was one of the questions that I had for the teams is, have we started that process? And I was really delighted to learn that the answer is yes, they’re way ahead of me. They’ve already started. We know and understand our markets well and we see good opportunities in the recontracting.

Adam Beaumont, Interim Chief Financial Officer, Northland Power: Yes. And as you know, Ben, Germany is probably one of the most liquid corporate PPA markets that’s out there. So good number of opportunities there.

Benjamin Pham, Analyst, BMO: Okay. That’s good. Maybe one last one to clean up on the dividend and you’ve committed to it. And you mentioned also placed more focus on adjusted free cash flow, which is pretty much what peers are doing. Does that suggest that when the Board thinks about sustainability, is that the metric to look at?

In other words, your payout ratio guidance is more 85% versus 100% this year?

Adam Beaumont, Interim Chief Financial Officer, Northland Power: That’s what we would suggest in comparison to our peers. Obviously, the difference is how you treat the development expenditures, which are discretionary and may fluctuate year over year. So if you’re looking to assess the underlying performance of the business, our adjusted free cash flow metric, which we would say is the best indicator of the long term value for the organization.

Christine Healy, President and CEO, Northland Power: So short answer, yes. Yes.

Benjamin Pham, Analyst, BMO: Okay, got it. Okay, thanks. Thank

Conference Operator: you. Our next question comes from Nick Boycek of Cormark Securities. Your line is open.

Nick Boycek, Analyst, Cormark Securities: Thanks. Good morning. Christine, in your prepared remarks, you kind of touched on the political landscape globally right now. And looking at the countries you’re looking to develop in further, I have to think that a lot of them are being the most pragmatic and logical about adding incremental renewables. And in the answer to Rupert, you mentioned the regulations being a key impediment.

I know it’s early, but are you seeing any of those markets start to maybe provide those sooner, provide more concessions or just make it a little bit easier for you guys to operate in their markets?

Christine Healy, President and CEO, Northland Power: So thanks for the question, Nick. I think one of the key things that we see is that once we get to know and understand the market, then our capability increases in that market as well. So and then by having partners who know those markets, that sort of increases our capacity on the regulatory side even further. So we think that we have a good understanding now in those markets as to what the regulatory process looks like. In terms of overall trends, I think that governments see overall that they want more renewable energy.

And in the markets where we’re active, I think that’s the feedback we get all the time. So in fact, it’s good dialogue around how can that process be made smoother, more efficient, more effective in order to deliver. And as we demonstrate our track record in those countries, I think that becomes kind of a positive loop. So I’m feeling positive about that for the future.

Nick Boycek, Analyst, Cormark Securities: Got it. Thanks. And then you mentioned as well that the private and public market valuation disconnect is getting more start. And you again kind of mentioned this in Rupert’s answer, but I’m curious if you guys are proactive in seeing some things that you may want to acquire. Obviously, you mentioned the balance sheet flexibility, you could potentially refinance other things.

Is the M and A pipeline active and something that you guys are ongoing in terms of looking at in the next couple of years?

Christine Healy, President and CEO, Northland Power: We are always on the hunt. So I would say, yes, I’m always keeping a very close eye on that.

Nick Boycek, Analyst, Cormark Securities: Okay. Appreciate it. Thank you.

Conference Operator: Thank you. I’m showing no further questions at this time. I’d like to turn it back to Christine Healy for closing remarks.

Christine Healy, President and CEO, Northland Power: Excellent. Thank you very much and thanks everyone for joining us today. Our next earnings call will be following release of Q1 results in May and we thank you for your continued support and interest.

Conference Operator: This concludes today’s conference call. Thank you for participating and you may now disconnect.

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