TransAlta Corporation (“TransAlta” or the “Company”) (TSX: TA) (NYSE: TAC) today reported its financial results for the three and nine months ended Sept. 30, 2024, demonstrating another quarter of strong financial performance.
“Our third quarter results illustrate the value of our proactive hedging strategy together with the active management of our Alberta merchant portfolio. Our asset optimization strategies have achieved exceptional results and we are tracking toward the upper end of our 2024 guidance given our portfolio position and performance during the first nine months of the year,” said John Kousinioris, President and Chief Executive Officer of TransAlta.
“As we look forward, given the ample supply conditions for Alberta throughout 2025, we have taken the decision to temporarily mothball Sundance 6, holding it in reserve as we continue to explore future economic opportunities relating to new demand for electricity entering the province and the enhancement of grid reliability. We will maintain flexibility to returning Sundance 6 to service as market fundamentals improve or opportunities to contract are secured.”
“Finally, we remain actively engaged in commercial discussions with Energy Capital Partners in respect of the acquisition of Heartland Generation and are making progress with the Competition Bureau in our effort to obtain regulatory approval. We are optimistic that we have a pathway to completing the transaction and adding Heartland’s complementary assets to our portfolio. We are also pursuing multiple opportunities to support the energy transition in our core jurisdictions, while at the same time actively pursuing redevelopment and recontracting opportunities at our increasingly valuable legacy thermal fleet,” added Mr. Kousinioris.
Third Quarter 2024 Financial Highlights
TransAlta’s third quarter results exceeded expectations delivering strong free cash flow and exceptional operating performance. The Company delivered Free Cash Flow (“FCF”) per share(1) of $0.47, due to its proactive hedging and asset management strategies given the anticipated decline in Alberta spot power prices in 2024, milder than anticipated weather, low natural gas prices and incremental generation from new supply in the market. Highlights for the quarter include:
- Adjusted EBITDA(1) of $325 million, compared to $453 million for the same period in 2023
- Operational adjusted availability of 94.5 per cent, compared to 91.9 per cent for the same period in 2023
- FCF(1) of $140 million or $0.47 per share, compared to $228 million or $0.87 per share for the same period in 2023
- The return of $114 million of capital to shareholders during the nine months ended Sept. 30, 2024, through the buyback of 11.8 million common shares constituting 76 per cent of the Company’s 2024 enhanced share repurchase program of up to $150 million
- Tracking towards the upper end of guidance for 2024 of
- Adjusted EBITDA of $1,150 million to $1,300 million
- FCF of $450 million to $600 million
Other Business Highlights and Updates
- Advancing the acquisition of Heartland Generation.
- Temporarily mothballing Sundance Unit 6 effective April 1, 2025 for a period of up to two years.
Key Business Developments
Advancing Acquisition of Heartland Generation
The Company continues to remain actively engaged with the federal Competition Bureau in an effort to obtain Competition Act approval for the Heartland Generation acquisition. We also remain engaged with Energy Capital Partners regarding commercial terms to advance the completion of the transaction. The Company remains optimistic that it has a pathway to completing the transaction in a timely manner and to adding Heartland Generation complementary assets to our portfolio.
Mothballing of Sundance Unit 6
On Nov. 4, 2024, the Company provided notice to the Alberta Electric System Operator that Sundance Unit 6 will be temporarily mothballed effective April 1, 2025, for a period of up to two years depending on market conditions. TransAlta maintains the flexibility to return the mothballed unit to service when market fundamentals or opportunities to contract are secured. The unit remains available and fully operational for the upcoming winter season.
Appointment of New Chief Financial Officer (“CFO”)
Joel Hunter was appointed Executive Vice President, Finance and Chief Financial Officer of the Company effective July 1, 2024.
Share Repurchase Program
TransAlta is committed to enhancing shareholder returns through appropriate capital allocation such as share buybacks and its quarterly dividend. In the first quarter of 2024, the Company announced an enhanced common share repurchase program for 2024 allocating up to $150 million, and targeting up to 42 per cent of 2024 FCF guidance to be returned to shareholders in the form of share repurchases and dividends.
On May 27, 2024, the Company announced that it had received approval from the Toronto Stock Exchange to purchase up to a maximum of 14 million common shares during the 12-month period that commenced May 31, 2024, and terminates May 31, 2025. Any common shares purchased under the NCIB will be cancelled.
During the nine months ended Sept. 30, 2024, the Company purchased and cancelled a total of 11,814,700 common shares, at an average price of $9.65 per common share, for a total cost of $114 million, including taxes.
Third Quarter 2024 Highlights
| $ millions, unless otherwise stated | Three months ended | Nine months ended | ||
| Sept. 30, 2024 | Sept. 30, 2023 | Sept. 30, 2024 | Sept. 30, 2023 | |
| Operational information | ||||
| Adjusted availability (%) | 94.5 | 91.9 | 92.5 | 89.4 |
| Production (GWh) | 5,712 | 5,678 | 16,612 | 16,246 |
| Select financial information | ||||
| Revenues | 638 | 1,017 | 2,167 | 2,731 |
| Adjusted EBITDA(1) | 325 | 453 | 968 | 1,343 |
| Earnings before income taxes | 9 | 453 | 370 | 915 |
| Net earnings (loss) attributable to common shareholders | (36) | 372 | 242 | 728 |
| Cash flows | ||||
| Cash flow from operating activities | 229 | 681 | 581 | 1,154 |
| Funds from operations(1) | 200 | 357 | 673 | 1,122 |
| Free cash flow(1) | 140 | 228 | 521 | 769 |
| Per share | ||||
| Net earnings (loss) per share attributable to common shareholders, basic and diluted | (0.12) | 1.41 | 0.80 | 2.75 |
| Funds from operations per share(1),(2) | 0.68 | 1.36 | 2.22 | 4.23 |
| FCF per share(1),(2) | 0.47 | 0.87 | 1.72 | 2.90 |
| Weighted average number of common shares outstanding | 296 | 263 | 303 | 265 |
