Brookfield Renewable Corp Q3 FY2024 earnings call

• The company delivered record FFO in the third quarter, benefiting from asset development, acquisitions, and strong pricing.
• Continues to expect 10% plus FFO per unit growth for 2024.
• Diversified globally across attractive power markets, focusing on low-cost mature technologies.
• Announced partnerships like with Ørsted in offshore wind.
• Successful asset monetizations this year, generating record proceeds, with returns significantly above targets.
• Deployed over $11 billion of equity into growth, including the proposed acquisition of Neoen.
• Balance sheet strengthened with $4.6 billion of available liquidity, and expects to execute $30 billion in financing to fund growth.

Brookfield Renewable had a strong third quarter with record funds from operations (FFO). The hydroelectric segment benefited from solid generation and secured two contracts with U.S. utilities at an average price of nearly $90 per megawatt hour, expected to uplift revenue. The wind, solar, distributed energy, and sustainable solutions segments, along with Westinghouse Nuclear, generated record results due to acquisitions and development activities. FFO for the quarter was $278 million, or $0.42 per unit, up 11% year-over-year. The hydroelectric segment also has significant capacity for re-contracting over the next five years, providing potential for additional FFO.

• Expect to achieve 10% plus FFO per unit growth for 2024.
• Anticipate incremental strong monetizations in the future.
• Committed and deployed over $11 billion of equity into growth, with the Neoen acquisition on track.
• Expect to execute $30 billion in financing this year, generating $700 million in up-financing to fund growth activities.

• Bifurcated market where high-quality, de-risked assets have strong bids, but large businesses with ongoing capital needs face capital scarcity.
• Potential regulatory or subsidy changes, though management believes the business is largely insulated.

Q: Sean Steuart from TD Securities asked about U.S. return profile and growth potential if tax credits change.

A: Connor Teskey responded that government support for relevant processes has strong bipartisan support, and the business is insulated from subsidy changes due to focus on low-cost, high-demand regions.

Q: Robert Hope from Scotiabank inquired about non-renewable power investments.

A: Connor Teskey stated the business is primarily renewable, but selectively invests in critical clean energy grid assets like nuclear, batteries, and biofuels, using robust risk-adjusted return assessments.

Q: Nelson Ng from RBC Capital Markets asked about opportunities to deploy capital post-election.

A: Connor Teskey mentioned the investment pipeline remains robust, with reduced access to capital for some public market-reliant entities benefiting the firm's ability to deploy scale capital.

Q: Rupert Merer from National Bank asked about return differences between mature and development assets.

A: Connor Teskey explained development margins in high-performing markets can be 400-600 basis points higher than sale margins.

Q: Mark Jarvi from CIBC asked about U.S. election impacts on M&A.

A: Connor Teskey stated asset sales of de-risked, high-quality assets won't be materially impacted, but uncertainty may affect access to capital for others.

Q: William Grippin from UBS asked about ITC and safe harboring.

A: Connor Teskey reiterated bipartisan support for tax credits, the business is well-insulated, and positioned to handle any changes.

Q: William Grippin also asked about fourth quarter FFO growth drivers.

A: Connor Teskey and Wyatt Hartley mentioned significant capital deployment into growth, strong performance of businesses like hydro and Westinghouse, and asset recycling gains contributing to FFO growth.