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Capital Power’s Earnings Call: Strong Growth and Strategic Acquisitions

Capital Power’s Earnings Call: Strong Growth and Strategic Acquisitions

Capital Power ((TSE:CPX)) has held its Q2 earnings call. Read on for the main highlights of the call.

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Capital Power’s recent earnings call showcased a strong performance, underscored by strategic acquisitions, operational excellence, and financial resilience. Despite facing challenges in renewable resources and data center project decisions, the company presented a net positive outlook with robust financial guidance.

Largest Acquisition to Date

Capital Power announced and closed its largest acquisition, adding 2.2 gigawatts of capacity. This move is a significant milestone in the company’s transformation over the past three years, enhancing its growth trajectory and market position.

Operational Excellence and Growth

The company demonstrated operational excellence by reaching commercial operation on the Goreway uprate project and delivering 9 terawatt hours of power. Additionally, it completed 62% of its scheduled outage days for the year, highlighting its commitment to efficiency and reliability.

Financial Performance

Capital Power reported an adjusted EBITDA of $322 million, maintaining a flat year-over-year performance. This stability was supported by strong contributions from its diversified U.S. flexible generation portfolio, showcasing the company’s financial resilience.

Revised 2025 Guidance

Due to a recent acquisition, Capital Power revised its 2025 guidance, projecting an adjusted EBITDA range of $1.5 billion to $1.65 billion. The adjusted funds from operations (AFFO) are expected to be between $950 million and $1.1 billion, reflecting the company’s strategic growth and favorable tax impacts.

Successful U.S. Debt Issuance

The company successfully executed a $1.2 billion private offering, which was multiple times oversubscribed. This highlights the strong market confidence in Capital Power’s financial strategies and future prospects.

Resilient Asset Base

Capital Power maintained its reputation for resilience, with Alberta’s Genesee units being the most efficient in Canada. The company managed to avoid carbon taxes and increased clean spark spreads despite a significant decline in Alberta Pool pricing.

Lower Renewable Resource

The renewables portfolio faced a decline in adjusted EBITDA due to a lower wind resource in Canada and the U.S. This challenge underscores the volatility in renewable energy resources and its impact on financial performance.

Challenges with Data Center Expansion

Capital Power decided not to pursue a smaller data center project at Genesee due to insufficient capacity allocation in Phase 1. This decision reflects the company’s strategic focus on projects with higher potential returns.

Increased Financing Costs

The company noted higher financing costs due to recent debt issuances. Despite this, Capital Power’s overall strong performance mitigated the impact on its financials.

Forward-Looking Guidance

During the Capital Power Second Quarter 2025 Analyst Conference Call, the company provided revised guidance for the full year. The adjusted EBITDA is now projected to range between $1.5 billion and $1.65 billion, reflecting contributions from newly acquired PJM assets. The AFFO range is anticipated to be between $950 million and $1.1 billion, with sustaining capital expenditures forecasted at $215 million to $245 million. These projections underscore Capital Power’s confidence in their strategy and ability to deliver strong financial performance amidst macroeconomic uncertainties.

In summary, Capital Power’s earnings call reflected a positive sentiment with significant growth through strategic acquisitions and operational excellence. Despite challenges in renewable resources and data center projects, the company’s robust financial guidance and successful debt issuance highlight its resilience and strategic focus.

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