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TransAlta Reports Full Year and Fourth Quarter 2023 Results and Announces Enhanced Share Repurchase Program
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PR Newswire
CALGARY, AB, Feb. 23, 2024
CALGARY, AB, Feb. 23, 2024 /PRNewswire/ - TransAlta Corporation ("TransAlta" or the "Company") (TSX: TA) (NYSE: TAC) today reported its financial results for the fourth quarter and year ended Dec. 31, 2023, which highlight another year of exceptional performance led by strong financial, operational and safety results.
Full Year 2023 Financial Highlights
- Key financial guidance and targets increased twice during 2023
- Adjusted EBITDA(1) of $1,632 million, compared to $1,634 million from the same period in 2022
- Free Cash Flow ("FCF")(1) of $890 million, or $3.22 per share, compared to $3.55 per share from the same period in 2022
- Cash flow from operating activities of $1,464 million, an increase of $587 million from the same period in 2022
- Earnings before income taxes of $880 million, an improvement of $527 million from the same period in 2022
- Net earnings attributable to common shareholders of $644 million, an increase of $640 million from the same period in 2022
- Announced a 9 per cent increase to the common share dividend, representing the fifth consecutive annual dividend increase
- Returned $87 million of capital to common shareholders during the year through the buyback of 7.5 million common shares
Fourth Quarter 2023 Financial Highlights
- Adjusted EBITDA of $289 million, compared to $541 million for the same period in 2022
- FCF of $121 million, or $0.39 per share, compared to $315 million or $1.17 per share for the same period in 2022
- Cash flow from operating activities of $310 million, compared to $351 for the same period in 2022
- Net loss before income taxes of $35 million, a decrease of $42 million for the same period in 2022
- Net loss attributable to common shareholders of $84 million, an increase of $79 million from the same period in 2022
Other Business Highlights and Updates
- Announced an enhanced common share repurchase program for 2024 of up to $150 million towards the repurchase of common shares, representing up to 40 per cent of 2024 FCF guidance being returned to shareholders in the form of share repurchases and dividends
- Achieved strong safety performance in 2023, including a record annual Total Recordable Injury Frequency of 0.30
- Strong operational adjusted availability of 88.8%
- Maintained emissions intensity at 0.41 tCO2e/MWh from 2022 levels
- Entered into 10-year transfer agreements with an AA- rated customer for the sale of approximately 80 per cent of the expected production tax credits to be generated from the White Rock and Horizon Hill wind facilities
- Completed the Kent Hills rehabilitation program in the first quarter of 2024. All 50 turbines have returned to commercial operation
- Energization activities are underway at the Horizon Hill and White Rock wind facilities with commercial operations expected to be achieved in the first quarter of 2024
- Completion of the Mount Keith 132kV expansion project is expected to be achieved in March 2024. The expansion of the transmission system in Western Australia supports the Northern Goldfields-based operations of BHP Nickel West ("BHP")
- Achieved commercial operation of the 48 MW Northern Goldfields solar and battery storage project in November 2023. The facilities are fully contracted with BHP for a term of 15 years and are expected to reduce BHP's emissions by 12 per cent at their Mt. Keith and Leinster operations
- Announced updated strategic growth targets to 2028, including adding up to 1.75 GW of new capacity to the Company's fleet by investing approximately $3.5 billion to develop, construct or acquire new assets through to the end of 2028 to deliver annual EBITDA of approximately $350 million
- Entered into a joint development agreement with Hancock Prospecting Pty Ltd. ("Hancock") to define, develop and operate clean energy solutions
- Entered into a definitive share purchase agreement to acquire Heartland Generation and its entire business operations in Alberta and British Columbia for approximately $658 million, subject to closing adjustment
- Completed the acquisition of TransAlta Renewables Inc. ("TransAlta Renewables") for total consideration paid of $1.3 billion, which consisted of $800 million of cash and approximately 46 million common shares
- Acquired a 50 per cent interest in the Tent Mountain 320 MW pumped hydro development project
"2023 was another year of exceptional performance for our Company led by record financial and safety results. During the year, we generated strong free cash flow of $3.22 per share, driven by record revenues across our generating fleet. Our dynamic asset optimization and hedging strategies continue to perform well in managing the evolving markets of our operating portfolio, illustrating the value of our growing fleet and the capabilities of our employees," said Mr. John Kousinioris, President and Chief Executive Officer of TransAlta.
"During the year, we deployed $87 million towards share repurchases which, together with our common share dividends, resulted in the return of $145 million or $0.53 per share in value to shareholders," added Mr. Kousinioris.
"We are focused on making balanced capital allocation decisions that enhance value for our shareholders and will remain disciplined in executing our ambitious Clean Electricity Growth Plan with a focus on securing appropriate risk-adjusted returns. We will not grow simply for the sake of growth and to meet targets. Given the current market price of our common shares, which we consider to be undervalued, we will look to enhance returns and shareholder value through our dividend and share repurchases in 2024 of up to $150 million."
"Our generating portfolio continues to perform well and is expected to generate between $1.47 and $1.96 per share of free cash flow in 2024. Our enhanced common share repurchase program and expected dividend payments in 2024 represent up to 40% of our free cash flow guidance to our shareholders."
"Turning to growth, our Mount Keith transmission expansion, along with our Horizon Hill and White Rock wind facilities, are well into commissioning and we expect all projects to be completed in March 2024. This milestone, coupled with the completion of our Garden Plain wind facility and Northern Goldfields solar and battery storage project, as well as the rehabilitation of Kent Hills, will contribute contracted adjusted EBITDA of approximately $175 million annually. I am also pleased we've been able to secure 10-year transfer agreements with an AA- rated customer for the sale of approximately 80 per cent of production tax credits from the White Rock and Horizon Hill wind facilities, providing another stream of contracted revenue from these assets."
"Strong free cash flow will, over time, continue to fund our transition to a higher proportion of contracted renewables and toward the path of higher share price valuation. As I look forward, there is every reason to believe that our success will continue in 2024 and beyond."
Key Business Developments
Change to Board of Directors
The Honourable Rona Ambrose has decided that she will not stand for re-election and will retire from the Board of Directors ("the Board") following the annual shareholder meeting on April 25, 2024. The Board extends its gratitude for her service to the Company. She has been a valuable contributor to the Board since 2017 and we thank her for her leadership and insights during her tenure, especially as Chair of the Governance, Safety and Sustainability Committee of the Board.
Production Tax Credit ("PTC") Sale Agreements
On Feb. 22, 2024, the Company entered into 10-year transfer agreements with an AA-rated customer for the sale of approximately 80 per cent of the expected PTCs to be generated from the White Rock and Horizon Hill wind projects. The expected annual average EBITDA from these contracts is approximately $57 million (US$43 million).
Normal Course Issuer Bid and Automatic Share Purchase Plan
On Dec. 19, 2023, the Company entered into an Automatic Share Purchase Plan ("ASPP") in order to facilitate repurchases of TransAlta's common shares under its Normal Course Issuer Bid ("NCIB"). Under the ASPP, the Company's broker may purchase common shares from the effective date of the ASPP until the end of the ASPP. All purchases of common shares made under the ASPP will be included in determining the number of common shares purchased under the NCIB. The ASPP will terminate on the earliest of the date on which: (a) the maximum purchase limits under the ASPP are reached; (b) Feb. 24, 2024; or (c) the Company terminates the ASPP in accordance with its terms.
During the year ended Dec. 31, 2023, the Company purchased and cancelled a total of 7,537,500 common shares, at an average price of $11.49 per common share, for a total cost of $87 million.
The NCIB provides the Company with a capital allocation alternative with a view to ensuring long-term shareholder value. The Board and management believe that, from time to time, the market price of the common shares might not be reflective of the underlying value and purchases of common shares for cancellation under the NCIB may provide an opportunity to enhance shareholder value.
Northern Goldfields Solar Achieves Commercial Operation
On Nov. 22, 2023, the Company announced that the 48 MW Northern Goldfields solar and battery storage facilities achieved commercial operation. The facilities consist of the 27 MW Mount Keith solar facility, the 11 MW Leinster solar facility, the 10 MW Leinster battery energy storage system and interconnecting transmission infrastructure, all of which are now integrated into TransAlta's existing 169 MW Southern Cross Energy North remote network in Western Australia. The facilities are fully contracted to BHP for a term of 15 years and are expected to reduce BHP's scope 2 emissions at Mount Keith and Leinster by 12 per cent annually.
TransAlta Announces Growth Targets to 2028
On Nov. 21, 2023, the Company held its 2023 Investor Day event and announced it had updated its strategic growth targets to 2028, which strengthens the Company's commitment to being a leader in clean electricity by delivering customer-centred power solutions. The growth targets include: adding up to 1.75 GW of new capacity to the Company's fleet by investing approximately $3.5 billion to develop, construct or acquire new assets through to the end of 2028, with a focus on customer-centred renewables and storage through the advancement of its 4.8 GW development pipeline, and expanding this development pipeline to 10 GW by 2028.
TransAlta Declares 9 Per Cent Dividend Increase
On Nov. 21, 2023, the Board approved an annualized $0.02 per share increase, or 9 per cent increase to our common share dividend and declared a dividend of $0.06 per common share to be paid on April 1, 2024. The quarterly dividend of $0.06 per common share represents an annualized dividend of $0.24 per common share.
TransAlta Enters Joint Development Agreement with Hancock
On Nov. 21, 2023, the Company entered into a joint development agreement with Hancock, Australia's fourth largest iron ore producer. This arrangement will build on TransAlta's expertise in supplying power to remote mining operations in Western Australia. TransAlta will work collaboratively with Hancock to define and supply behind-the-fence generation solutions for Hancock in the Port Hedland area.
TransAlta to Acquire Heartland Generation from Energy Capital Partners
On Nov. 2, 2023, the Company announced that it had entered into a definitive share purchase agreement with an affiliate of Energy Capital Partners, the parent of Heartland Generation Ltd. and Alberta Power (2000) Ltd. (collectively, "Heartland"), pursuant to which TransAlta will acquire Heartland and its entire business operations in Alberta and British Columbia. The acquisition will add 10 facilities to TransAlta's fleet, totalling 1,844 MW of new capacity. The transaction is expected to close in the first half of 2024, subject to customary closing conditions, including receipt of regulatory approvals.
The purchase price for the acquisition is $390 million, subject to working capital and other adjustments, as well as the assumption of $268 million of low-cost debt. The Company will finance the transaction using cash on hand and drawing on its credit facilities.
The assets are expected to add approximately $115 million of average annual EBITDA including synergies. Approximately 55 per cent of revenues are under contract with highly creditworthy counterparties, with a weighted-average remaining contract life of 16 years. Corporate pre-tax synergies are expected to exceed $20 million annually.
TransAlta Completes Acquisition of TransAlta Renewables to Simplify Structure and Enhance Strategic Position
On Oct. 5, 2023, the Company completed the acquisition of TransAlta Renewables pursuant to the terms of the previously announced arrangement agreement between the parties (the "Arrangement"). TransAlta acquired all of the outstanding common shares of TransAlta Renewables ("RNW Shares") not already owned, directly or indirectly, by TransAlta and certain of its affiliates, resulting in TransAlta Renewables becoming a wholly owned subsidiary of the Company. Prior to the Arrangement, TransAlta and its affiliates collectively held 160,398,217 RNW Shares, representing 60.1 per cent of the issued and outstanding RNW Shares, with the remaining 106,510,884 RNW Shares held by TransAlta Renewables shareholders ("RNW Shareholders") other than TransAlta and its affiliates.
The Arrangement was approved by RNW Shareholders at a special meeting of shareholders held on Sept. 26, 2023, and by the Court of King's Bench of Alberta on Oct. 4, 2023. The consideration paid totalled $1.3 billion, which consisted of $800 million of cash and approximately 46 million common shares of the Company.
TransAlta Tops Newsweek's Inaugural List of World's Most Trustworthy Companies
On Sept. 14, 2023, the Company announced that it ranked first on Newsweek's inaugural "World's Most Trustworthy Companies 2023" list for the Energy and Utilities category. The list identifies the top 1,000 companies in 21 countries and across 23 industries. Newsweek's 2023 World's Most Trustworthy Companies were chosen based on a holistic approach to evaluating three pillars of public trust – customers, investors and employees. The list was compiled based on an extensive survey of over 70,000 participants, gathering 269,000 evaluations of companies that people trust as a customer, as an investor or as an employee.
Garden Plain Wind Facility Achieved Commercial Operation
In August 2023, the Garden Plain wind facility was commissioned adding 130 MW to our gross installed capacity. The facility is fully contracted with Pembina Pipeline Corporation and PepsiCo Canada, with a weighted average contract life of approximately 17 years.
Tent Mountain Pumped Hydro Development Project
On April 24, 2023, the Company acquired a 50 per cent interest in the Tent Mountain Renewable Energy Complex ("Tent Mountain"), an early-stage 320 MW pumped storage hydro development project located in southwest Alberta, from Evolve Power Ltd. ("Evolve"), formerly known as Montem Resources Limited. The acquisition includes land rights, fixed assets and intellectual property associated with Tent Mountain.
The Company and Evolve own the Tent Mountain project within a special purpose partnership that is jointly managed, with the Company acting as project developer. The partnership is actively seeking an offtake agreement for the energy and environmental attributes that will be generated by the facility.
Year Ended and Fourth Quarter 2023 Highlights
| $ millions, unless otherwise stated | Year Ended | Three Months Ended | ||
| Dec. 31, 2023 | Dec. 31, 2022 | Dec. 31, 2023 | Dec. 31, 2022 | |
| Operational information | | | | |
| Adjusted availability (%) | 88.8 | 90.0 | 86.9 | 89.5 |
| Production (GWh) | 22,029 | 21,258 | 5,783 | 6,005 |
| Select financial information | | | | |
| Revenues | 3,355 | 2,976 | 624 | 854 |
| Adjusted EBITDA(1) | 1,632 | 1,634 | 289 | 541 |
| Earnings (loss) before income taxes | 880 | 353 | (35) | 7 |
| Net earnings (loss) attributable to common | 644 | 4 | (84) | (163) |
| Cash flows | | | | |
| Cash flow from operating activities | 1,464 | 877 | 310 | 351 |
| Funds from operations(1) | 1,351 | 1,346 | 229 | 459 |
| Free cash flow(1) | 890 | 961 | 121 | 315 |
| Per share | | | | |
| Net earnings (loss) per share attributable to | 2.33 Werbung Mehr Nachrichten zur Transalta Aktie kostenlos abonnieren
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