Brookfield Renewable 2026 Q3 Earnings Call

Thank you, operator. Good morning, everyone, and thank you for joining us for our third quarter 2026 conference call. Before we begin, we would like to remind you that a copy of our news release and investor supplement can be found on our website. We also want to remind you that we may make forward-looking statements on this call. These statements are subject to known and unknown risks, and our future results may differ materially. For more information, you are encouraged to review our regulatory filings available on SEDAR+, EDGAR, and on our website. On today's call, we will review our third quarter results, discuss what we are seeing in the energy markets today, highlight the continued execution of our growth initiatives, and outline how we continue to position the business for long-term value creation.

Patrick will then review our financial results, our balance sheet, and our funding activities, including our growing capital recycling program, and he will also provide an update on our proposed simplification. Following our comments, we look forward to taking your questions. Turning first to the quarter, we delivered record financial results and are accelerating our growth activities. We continue to scale our recurring capital recycling program alongside our steadily growing development platform. Lastly, we are also strengthening our financial position, ending the quarter with $5.1 billion of liquidity, positioning the business to capitalize on opportunities in the current environment. In the third quarter, we delivered FFO of $346 million, or $0.51 per unit, up 15% year-over-year, or 11% on a per-unit basis.

In the last 12 months, we delivered FFO of $1,488 million, or $2.18 per unit, up 15% and 12% respectively compared to the prior year period. We invested or committed $3 billion into growth, or $700 million net to BEP during the quarter, including closing our acquisition of Boralex, a leading global renewable platform. Subsequent to quarter end, we closed the acquisition of Aypa, the largest standalone battery storage platform in North America, strengthening our battery storage capabilities. We continue to scale our development through the addition of new platforms and the acceleration of organic growth activities across our existing businesses, commissioning 2.5 GW of new capacity in the quarter.

We also further de-risked our advanced pipeline by signing power purchase agreements for 1.6 GW of additional projects, and today we remain on track to ramp up our run rate of 10 GW of commissioned capacity by 2027. Alongside our growing development, we continue to scale our capital recycling program, agreeing to or closing sales since the end of the second quarter that are expected to generate approximately $2.8 billion in proceeds, or $850 million net to BEP, at strong returns. As demonstrated in recent years, this is a new and consistent earnings driver to our business and the natural result of the increasing amount of new capacity we bring online each quarter from organic growth.

As our business grows, we have an increasingly large and diverse pool of assets available for sale, and our flexibility to sell individual assets, portfolios, entire platforms, or minority stakes allows us to consistently crystallize value and generate a growing amount of recurring and accretive capital to fund our growth. Before discussing the broader energy market and providing an update on our growth initiatives, we thought it would be worth highlighting the resilience of our business in an environment of higher interest rates and inflation. We have an incredibly durable platform that has delivered strong results through periods of both lower and higher rates. For new developments, we underwrite projects based on prevailing interest rates, passing financing costs through into contract prices while preserving our target returns. And with substantially all of our existing proportionate debt at fixed rates, our business is well insulated from rising rates.

We also benefit from inflation linkage across approximately 70% of our revenues, which, when combined with our high margins, provides a positive earnings tailwind during inflationary periods and positions our platform to deliver durable and growing cash flows over time. Turning to the energy markets, the environment for our business remains highly constructive. Global demand for power continues to grow, outpacing new supply-driven by the longstanding trends of electrification, re-industrialization, and digitalization. At the same time, governments are increasingly focused on securing reliable and affordable power to support economic growth and energy independence. This widening supply-demand imbalance is driving strong demand for renewable generation, alongside investment in battery storage and nuclear power to provide the scale and reliability needed to support expanding electricity grids. Against this backdrop, we continue to see significant opportunities to invest in these technologies and deliver differentiated integrated solutions.

Importantly, we remain disciplined in how we pursue growth, continuing to develop projects backed by long-term contracts with some of the largest and most creditworthy buyers of power in the world. During the quarter, we made meaningful progress advancing strategic priorities within our nuclear business, Westinghouse, where we see among the most significant long-term growth opportunities. In September, we achieved another significant milestone, signing a strategic framework agreement with the U.S. federal government and the Republic of Korea. Building on our previously announced partnership with the U.S. government, the agreement contemplates up to $120 billion of Korean investment to support the construction of eight large-scale reactors on federal sites, including six Westinghouse AP1000s and two Korean APR-1400s, bringing us another step closer to the large-scale deployment of several new utility-scale reactors in the United States.

Westinghouse will provide design, engineering, and procurement services during construction, followed by long-term fuel and maintenance services for the constructed AP1000 reactors, generating recurring long-term cash flows. Westinghouse will also benefit from upfront licensing payments and a significant scope of work on the two Korean reactors. While the framework remains subject to final negotiations, it is expected to drive meaningful growth at Westinghouse while supporting investment in the nuclear supply chain, enabling further reactor deployment globally. More broadly, growing demand for nuclear power combined with our expertise across the sector and access to scale capital is creating additional opportunities for us to invest in nuclear, which we are actively evaluating. In addition, we continue to expand our capabilities and deliver on our growth targets through the acquisition of leading energy platforms. Since our last update, we closed the acquisition of both Boralex and Aypa.

These acquisitions strengthen our position in attractive markets and battery storage, enhancing our ability to deliver integrated energy solutions to customers. Since closing these acquisitions, we have already begun executing on our business plans to accelerate growth and create value. At Boralex, we announced the tuck-in acquisition of a renewable developer in the U.K., expanding Boralex' development capabilities in an attractive market. We are also evaluating potential monetizations across the platform to crystallize value and fund future growth, consistent with what we have done recently at Neoen and many of our other renewable platforms. At Aypa, we have also hit the ground running, signing three new power purchase agreements totaling approximately 900 MW at or above our underwriting expectations, while advancing development in line with plan.

More broadly, we continue to see growing demand for battery storage, both through standalone projects and increasingly through hybrid solutions combining renewable generation and storage. Year to date, we have delivered almost 600 MW of battery capacity across our platforms, including contracted hybrid projects in Australia and Europe, as well as standalone batteries in the U.S. and Canada. These opportunities are further reinforcing the value of our battery storage capabilities and our ability to deliver comprehensive power solutions to our customers in a way that few others can. Stepping back, despite recent market volatilities, the fundamentals of our business remain as strong as ever. We are delivering robust results and growth from our global portfolio of critical infrastructure assets. We are executing on our growth plans through disciplined acquisitions and the delivery of contracted projects, and we are increasingly generating strong returns through our recurring capital recycling activities.

As a result, we expect to finish 2026 with earnings growth in line with or ahead of our long-term targets. Underpinning all of this is our best-in-class balance sheet and leading access to capital, which provides us with the flexibility to pursue opportunities at scale. Taken together, with a favorable long-term outlook for power demand, our sector-leading capabilities, and our strong balance sheet, we believe we are better positioned than ever to compound value over the long term for our investors. With that, we will turn the call over to Patrick.

Thank you, Connor, and good morning to everyone on the call. We delivered another record quarter, generating FFO of $346 million, or $0.51 per unit, up 15% or 11% per unit year-over-year. Our results this quarter benefited from our long-term contracted cash flows, inflation-linked revenues, and our diverse global business. We also realized the benefits from assets commissioned over the last 12 months and execution of our scaling asset recycling program. Turning to our segment results. Our hydroelectric business generated $214 million of FFO, benefiting from realized gains on the sale of our remaining 25% interest in our Maine hydro portfolio and the sale of some small hydros from our Isagen business in Colombia. These gains, together with the diversification of our fleet, helped offset weaker hydrology in Ontario and Colombia.

Results at Isagen specifically were impacted by drier conditions associated with El Niño, which we expect to be temporary, with generation returning toward long-term averages in the near term. Our wind and solar businesses generated a combined $243 million of FFO, benefiting from contributions from record capacity commissioned over the last 12 months and realized gains from the sale of assets to Northview Energy. Lastly, our distributed energy, storage, and sustainable solutions businesses contributed $54 million of FFO, supported by development activities and continued strong performance at Westinghouse. Year to date, adjusted EBITDA from Westinghouse's operating plants business, its core business today, increased over 20%, reflecting strong underlying demand for nuclear fuel and services, while the business continues to advance new AP1000 reactor development opportunities. Turning to our balance sheet.