TransAlta Corporation (NYSE:TAC) Q3 2023 Results Conference Call November 7, 2023 11:00 AM ET

Company Participants

Chiara Valentini - Vice President, Strategic Finance and Investor Relations

John Kousinioris - President and Chief Executive Officer

Todd Stack - EVP, Finance and Chief Financial Officer

Kerry O'Reilly Wilks - EVP, commercial, Legal, and External Affairs

Conference Call Participants

Maurice Choy - RBC Capital Markets

Mark Jarvi - CIBC

John Mould - TD Securities

Ben Pham - BMO

Patrick Kenny - National Bank

Operator

Good morning. My name is Jenny, and I will be your conference operator today. At this time, I would like to welcome everyone to TransAlta Corporation's Third Quarter 2023 Results Conference Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session [Operator Instructions].

Ms. Valentini, you may begin your conference.

Chiara Valentini

Thank you, Jenny. Good morning, everyone. And welcome to TransAlta's third quarter 2023 conference call. With me today are John Kousinioris, President and Chief Executive Officer; Todd Stack, EVP, Finance and Chief Financial Officer; and Kerry O'Reilly Wilks, EVP, commercial, Legal, and External Affairs. Today's call is being webcast, and I invite those listening on the phone lines to view the supporting slides that are posted on our Web site. A replay of the call will be available later today, and the transcript will be posted to our Web site shortly thereafter. All the information provided during this conference call is subject to the forward-looking statement qualification set out here on Slide 2. It's detailed further in our MD&A and incorporated in full for the purposes of today's call. All amounts referenced during the call are in Canadian currency, unless otherwise noted. The non-IFRS terminology used, including adjusted EBITDA, funds from operations and free cash flow, are also reconciled in the MD&A for your reference. On today's call, John and Todd will provide an overview of the quarter's results. After these remarks, we can call for questions.

And with that, let me turn the call over to John.

John Kousinioris

Thank you, Chiara. Good morning, everyone. And thank you for joining our third quarter results call for 2023. As part of our commitment towards reconciliation, I want to begin by acknowledging that TransAlta's head office where we are today is located in the traditional territories of the Niitsitapi, the people of the treaty seven region in Southern Alberta, which includes the Siksika, the Piikani, the Kainai, the Tsuut'ina, and the Stoney-Nakoda First Nations, including the Bearspaw, Chiniki and Good Stony First Nations, as well as the home of Matis Nation of Alberta Region 3. TransAlta delivered another strong performance in the third quarter with $453 million of adjusted EBITDA and free cash flow of $228 million or $0.87 per share. Both metrics were in line with our expectations for the quarter. Our performance was led by our Alberta gas, delays in supply returning to service along with the reduction of power imports into Alberta and the lower water and wind resource enabled our merchant gas fleet in Alberta to perform exceptionally well. Our asset optimization program for the Alberta gas fleet also delivered higher contributions than the third quarter of 2022 due to higher hedged volumes at overall higher hedge prices than the previous year. This, coupled with lower realized gas prices in 2023, significantly expanded gross margin from our Alberta gas portfolio compared to Q3 of 2022. Our Alberta hydro fleet also performed well, although, more normalized as compared to last year's exceptional quarter due to the impact of lower prices and lower water resource availability, which impacted production. Overall, our fleet availability was excellent at 91.9%.