Capital Power ((TSE:CPX)) has held its Q4 earnings call. Read on for the main highlights of the call.
Capital Power’s recent earnings call revealed a generally positive sentiment, highlighting significant achievements such as record annual generation, successful project completions, and strong contributions from the U.S. portfolio. Despite these successes, the company faced challenges, including a decrease in annual adjusted EBITDA and a difficult Alberta market. Overall, the sentiment was optimistic, with a strong strategic positioning for future growth, even amidst some financial setbacks.
Record Annual Generation
Capital Power achieved a remarkable milestone by delivering approximately 38 terawatt hours across its fleet, marking a record annual generation. This achievement was made possible by an expanded portfolio, showcasing the company’s ability to enhance its operational efficiency and capacity.
Genesee Repowering Project Completion
The successful completion of the Genesee Repowering project was a significant highlight. The transition of the facility to 100% natural gas increased capacity by 512 megawatts and reduced Scope 1 greenhouse gas emissions by 3.4 million tons per annum, aligning with Capital Power’s sustainability goals.
Significant U.S. Portfolio Contribution
The U.S. assets played a crucial role, contributing approximately 45% of adjusted EBITDA. The U.S. portfolio’s adjusted EBITDA saw a substantial increase from $369 million in 2023 to $656 million in 2024, underscoring the importance of the U.S. market in Capital Power’s growth strategy.
Successful Capital Recycling and Asset Sales
Capital Power successfully sold two renewable assets for $333 million in pre-tax cash proceeds. This move aligns with their strategy to optimize the portfolio, ensuring that resources are allocated efficiently to support future growth.
Strong Financial Performance
In the fourth quarter of 2024, Capital Power reported an adjusted EBITDA of $330 million. There was also a $20 million increase in AFFO from the same period in 2023, driven by higher adjusted EBITDA and lower income tax, reflecting the company’s robust financial health.
Decreased Annual Adjusted EBITDA
Despite the successes, Capital Power experienced a decrease in year-end adjusted EBITDA, which was $1,333 million, down $122 million year-over-year. This decline was mainly due to lower generation and power prices in the Alberta portfolio.
Challenges in Alberta Market
The Alberta market posed challenges with lower generation and power prices impacting the overall financial results. This situation highlights the volatility and risks associated with the Alberta commercial portfolio.
Forward-Looking Guidance
Looking ahead, Capital Power provided guidance for 2025, emphasizing strategic priorities and financial targets. The company aims for adjusted EBITDA between $1,340 million and $1,440 million and anticipates AFFO in the range of $850 million to $950 million. They remain focused on strategic M&A opportunities, recontracting efforts, and expanding data center opportunities, particularly in Alberta and the U.S. The stability provided by diversified U.S. assets and ongoing contract negotiations are expected to offer significant upside potential.
In summary, Capital Power’s earnings call reflected a positive outlook with strong strategic positioning for future growth. Key achievements included record annual generation, successful project completions, and substantial contributions from the U.S. portfolio. Despite facing challenges such as a decrease in annual adjusted EBITDA and a difficult Alberta market, the company remains optimistic about its future prospects, supported by strategic initiatives and robust financial guidance.