Release Date: August 01, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Polaris Renewable Energy Inc (RAMPF, Financial) reported a quarterly dividend of $0.15 per share, indicating a commitment to returning value to shareholders.
- The company successfully completed major maintenance on its Nicaragua facility on time and within budget, ensuring operational reliability.
- Production in the Dominican Republic increased due to the replacement program and newly installed panels, reflecting enhanced productivity.
- The Panama Vista Hermosa solar park exceeded management expectations in terms of production, showcasing strong performance.
- Polaris Renewable Energy Inc (RAMPF) is well-positioned financially with a strong cash position and low leverage, enabling potential growth and acquisitions.
Negative Points
- Overall power production decreased to 186,887 megawatt hours from 209,982 megawatt hours in the same period last year, indicating a decline in output.
- Revenue for the quarter was $18.7 million, down from $20.8 million in the same period in 2023, reflecting lower earnings.
- Net earnings attributable to shareholders dropped significantly to $985,000 from $4.6 million in the prior year, indicating reduced profitability.
- Adjusted EBITDA decreased to $13.3 million from $15.7 million in the same period last year, showing a decline in operational efficiency.
- Production in Peru was lower due to early onset of the dry season, impacting overall consolidated production negatively.
Q & A Highlights
Q: Can you provide more details on the timing and scale of the anticipated M&A transaction?
A: Marc Murnaghan, CEO: We hope to finalize the transaction within the next 60 to 90 days. The acquisition is expected to be similar in scale to our Canola project, with potential for brownfield expansion and integration of storage solutions.
Q: How are the competitive dynamics shifting in your target markets with the lower cost of solar and batteries?
A: Marc Murnaghan, CEO: We do not foresee significant competition affecting power prices in our target markets. We are focusing on layering in generation where CapEx is decreasing, which should improve margins.
Q: What are the CapEx expectations for the remainder of this year and into 2025?
A: Marc Murnaghan, CEO: For the Dominican Republic, we expect about $10 million in Q4 and $25 million next year. The total CapEx has been revised down to approximately $35 million.
Q: How have the returns on invested capital changed with the cost profile adjustments?
A: Marc Murnaghan, CEO: IRRs have increased by about two to three percentage points, reaching around 20%. This makes the projects very attractive, and we aim to proceed quickly.
Q: What is the status of merchant prices in Panama, and are there plans to lock in these prices?
A: Marc Murnaghan, CEO: Prices have started to come down due to the rainy season. We expect longer-term prices to stabilize around Q4. We plan to bid into a 500 MW renewable power call for 15-year contracts.
Q: How do you assess operating costs for potential acquisitions?
A: Marc Murnaghan, CEO: We have good visibility on operating costs, which are relatively fixed and known. We tend to budget conservatively and have shown the ability to reduce costs over time.
Q: Is there potential to replace degraded power in Nicaragua with solar?
A: Marc Murnaghan, CEO: While solar is an option, space is limited. The primary method to maintain or grow power would be drilling more geothermal wells, but we prefer to use excess cash flow for diversification and growth in other jurisdictions.
Q: What is the status of generating revenue from carbon credits?
A: Marc Murnaghan, CEO: The voluntary market for carbon credits has shown renewed interest. We are exploring sales in the $2 to $3 per ton range and may see some transactions in the back half of the year.
Q: Can you comment on the health of the green bond market and the rates you are seeing?
A: Marc Murnaghan, CEO: The green bond market remains strong, with rates potentially saving us 50 to 100 basis points. The main benefit for us would be the improved amortization schedule, converting more EBITDA to free cash flow.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
