Brookfield Renewable Corporation (BEPC) Earnings Call Transcript & Summary

Thank you Jen, and good morning, everyone. It's now 9 a.m. in Toronto, and time to begin the Annual Meeting of Shareholders of Brookfield Renewable Corporation. My name is Jeffrey Blidner, and as Chair of the Board, it's my pleasure to chair today's meeting. On behalf of the Board and its management team, I'd like to extend a warm welcome to everyone joining us today. As the first order of business, I'd like to ask Jennifer Mazin, our Co-President, our General Counsel; and Corporate Secretary and today's moderator to set up the voting procedure for the meeting and the process to submit questions.

Voting during the meeting will take place on our virtual meeting platform. I will now explain this process. For each matter being voted on, every holder of Class A exchangeable subordinate voting shares, which we will refer to at this meeting as the Class A shares, is entitled to 1 vote in respect of each share held. The Class A shares as a class collectively hold 25% of the outstanding votes and the Class B multiple voting shares, which we will refer to at this meeting as the Class B shares, all of which are held by a subsidiary of Brookfield Renewable Partners L.P. holds 75% of the outstanding votes. Adoption of a proposed motion requires a majority of the votes cast at the meeting by the holders of the Class A shares and the Class B shares voting together as a single class. Voting will be open for all resolutions throughout the formal portion of the meeting. This will allow you to choose to vote on each resolution immediately or to wait until conclusion of discussion on each resolution prior to casting your vote. If you voted in advance of the meeting and do not wish to change your vote, then you do not need to do anything. By voting at the virtual meeting on any matter, your previously submitted vote in respect of such matter will be automatically revoked. To vote on a poll, click the voting tab at the top of your screen. The items to be voted on will appear in a column, and you can make your selections for each. A confirmation message will appear directly above the item once a vote is cast. We welcome questions from our shareholders, which may be submitted by typing the question into the virtual meeting platform using the messaging icon on the top of the page. Please indicate whether your question is of a general nature or if it relates to a motion being considered as part of the meeting's formal business. Please click the submit button once you have finished typing your questions. I will read out the question and ask a member of management to respond to it. If we receive many questions that are similar, we will read one of the questions and indicate that we have received many similar questions. Only registered shareholders or proxy holders are able to submit questions at this meeting. We will endeavor to answer all questions submitted during the allotted time. We recommend that you submit any questions relating to the motions being tabled as soon as possible as it may take time for the virtual meeting platform to process them.

Thank you, Jen. I now call the meeting to order, and ask Computershare Investor Services, Inc., by its representative, Louise Waltenbury, to act as a scrutineer. I also ask Jen to act as Secretary of the meeting. In the event of a technological failure that prevents the meeting from continuing, the meeting will be rescheduled, and you will be appropriately notified. It's now my pleasure to introduce our Chief Executive Officer, Connor Teskey.

Thank you, Jeff, and thank you, everyone, for joining our Annual General Meeting. I am pleased to be here, and to also introduce Patrick Taylor, our Chief Financial Officer. Once we get through the formal part of the meeting, Patrick and I will give a brief presentation, and then we would be happy to answer any questions that you may have.

Thank you, Connor. There are 3 items of business to be considered today as part of the formal meeting. And I would ask Jen to outline them for you.

First, to receive the consolidated financial statements of the corporation for the fiscal year ended December 31, 2024, including the external auditor's report. Second, to elect directors who will serve until the next annual meeting of shareholders. And third, to appoint the external auditor and authorize the directors to set their remuneration. As mentioned, in connection with the business to be dealt with today, all voting will be conducted online through the virtual meeting platform. Voting is now open on all resolutions. In order to expedite the formal part of today's meeting, the Chair has asked Patrick Taylor as proxy holder to move various resolutions. Although this procedure will assist in the handling of the formal matters, it is not intended to discourage anyone from submitting questions in reference to any resolution after it has been proposed. Mr. Chair, please be advised that the notice calling this meeting and the Management Information Circular were disseminated to voting shareholders in accordance with all applicable laws. As Secretary of the meeting, I will keep a copy of the notice and proof of mailing with the minutes of this meeting. Based upon the scrutineer's preliminary report on attendance, I confirm that there is a quroum.

I therefore declare the meeting properly constituted for the transaction of the business, for which it has been called. Turning now to the first item of formal business. I will table the corporation's consolidated financial statements for the fiscal year ended December 31, 2024, together with the external auditor's report. Copies of our annual financial statements have been mailed to shareholders who requested them and are also available on our website. Any questions at all?

Mr. Chair, we have not received any questions or comments submitted in connection with the financial statements.

Thank you, Jen. The second item of business at our meeting today is to elect directors who will serve until the next Annual Meeting of Shareholders. Jen, would you please read the names of the proposed nominees.

The 8 proposed nominees for election by holders of the Corporation's Class A shares and Class B shares are: Jeffrey Blidner, Patricia Zuccotti, Eleazar de Carvalho Filho, Nancy Dorn, Stephen Westwell, Lou Maroun, Sara Deasley and Randy MacEwen. Information on all 8 director nominees is set out in our Management Information Circular, which was posted on our website and is available from the company upon request. You will note that Scott Cutler is not standing for reelection as a director at today's meeting. After serving as a Board member since 2020, Mr. Cutler resigned from our Board earlier this year to join the Board of Brookfield Asset Management. I want to express our sincere appreciation to Mr. Cutler for his years of dedication and many contributions to Brookfield Renewable and our Board's deliberations. Mr. Chair, we have not received any questions or comments with respect to the nomination of directors.

We invite shareholders and proxy holders to submit their votes online, if they have not already done so. As a reminder, if you've already voted or sent in your proxy, there's no need to do anything unless you wish to change your vote. [Voting].

I nominate for election as directors the 8 nominees named in the management information circular dated May 2, 2025.

Thank you, Patrick. I declare the nominations closed. Management has received proxies representing a majority of the corporation's Class A shares and 100% of the Class B shares. These proxies direct management to vote a majority of the Class A shares and all of the Class B shares in favor of the resolution. I now declare those nominated have been duly elected as directors of the corporation. The third and final item of business today is the appointment of the corporation's external auditor and authorizing the directors to set their remuneration. As stated in the management information circular, the Audit Committee of our Board of Directors has recommended that Ernst & Young LLP be reappointed as the corporation's external auditor.

Mr. Chair, I move that Ernst & Young LLP be appointed the external auditor of the corporation until the next annual meeting and that the directors be authorized to set the remuneration.

Thank you Patrick. The resolution has been moved and the motion is now before the meeting for discussion.

Mr. Chair. We have not received any questions or comments submitted in connection with the appointment of our auditor.

Management has received proxies representing a majority of the corporation's Class A shares and 100% of the Class B shares. These proxies direct management to vote a majority of the Class A shares and all of the Class B shares in favor of the resolution. Voting is now closed on all resolutions. Recognize that we have the results of the resolutions based on the tabulation of votes cast in advance of the meeting.

Thank you, Jeff. On the appointment of the corporation's external auditor and the authorization of Directors to set their remuneration, I am pleased to declare the motion carried. The final voting results will be available after the meeting and posted to SEDAR at www.sedarplus.ca.

Thanks, Jen. That completes the formal business of today's meeting. Since there is no other business, this concludes our meeting. Now that the formal meeting has concluded, our CEO, Connor and our CFO, Patrick, will make a presentation on behalf of the management team. At the end of the presentation, they will both be available to respond to any questions or comments you may have submitted. Please note that in responding to questions and in talking about our new initiatives and our financial and operating performance, we may make forward-looking statements. These statements are subject to known and unknown risks, and future results may differ materially. Finally, we would like to ensure that all shareholders who are interested in asking a question have the opportunity to do so. We'll make every effort to address questions during the allotted question-and-answer period. Over to you, Patrick and Connor.

Thank you, Mr. Chair. 2024 was another record year for our business. We delivered our strongest operating and financial results ever and position the business for significant further growth and value creation in the future. We delivered FFO of $1.83 per unit, building on our track record of double-digit growth over the past decade. Our business benefited from our inflation-linked and contracted cash flows, contributions from acquisitions and the execution of various organic growth and value creation initiatives across our business. This includes the sale of derisked operating assets and platforms, which generated strong returns and are now very much a regular and ongoing part of our business strategy. 2024 was a record year for deal activity, both in terms of monetization of assets and new investment commitments, demonstrating the compelling opportunity set as both buyers and sellers and our ability to execute on both. During the year, we advanced our commercial initiatives and continue to partner with the largest buyers of clean power globally, signing contracts for almost 19,000 gigawatt hours per year for generation. Again, another record performance and indicative of the incredible demand for power today. We commissioned a record 7 gigawatts of new capacity globally, almost 7x the capacity we brought online just 3 years ago and continue to advance our pipeline. We have continued to be uncompromising in how we fund our business, and our investment-grade balance sheet remains top tier in the sector. We executed a record number of financings this past year and finished the year with over $4.3 billion of liquidity to opportunistically fund our growth. In 2024, we committed or deployed $12.5 billion of capital across various transactions and through our development initiatives. In 2024, we made our largest investment ever in our renewable power and transition business with our acquisition of Neoen, a leading global renewable platform with best-in-class management and market-leading positions in France, Australia and the Nordics. What may not be appreciated is that Neoen is also a leading operator and developer of battery energy storage systems, a technology that we see as increasingly important to supporting growing energy demand and the stability of power grids. With growing demand for storage, falling cost of development and higher potential revenues from stabilizing services as well as the opportunity to contract capacity generation, we are focused on deploying capital into battery energy storage solutions in almost all markets. And with the investment in Neoen, we are now one of the largest battery developers globally with 3.3 gigawatts of operating and under construction capacity and an additional 40 gigawatts of capacity in our pipeline. This past year was also highlighted by our investment in a portfolio of operating assets owned by Ørsted, the world's largest and leading offshore wind player. We invested in a scale, fully operational 3.5 gigawatt offshore wind portfolio in the U.K. What attracted us to this investment was the derisked nature of the portfolio, which has secured long-term government-backed inflation-linked contracts for difference and has approximately 90% of operating costs fixed through long-term O&M transmission and lease contracts. The assets come with no development or construction risk and are managed by the leading offshore wind developer and operator. We were also successful in reaching an agreement to acquire National Grid Renewables in the past year. National Grid Renewables is a fully integrated onshore renewable power operator and developer in the U.S. with 3.9 gigawatts of operating and under construction assets, a 1 gigawatt construction-ready portfolio and an over 30 gigawatt development pipeline. National Grid's contracted operating portfolio provides strong downside protection, and we see an opportunity to deliver significant value through the development of National Grid's large, high-quality advanced stage pipeline, similar to the carve-out of Deriva, which was formerly Duke Energy's renewables business that we successfully completed about 2 years ago. This past year, we are successful in executing on our asset recycling strategy, generating record proceeds of $2.8 billion or over $1 billion net to debt. While we underwrite our investments on a hold-to-maturity basis to deliver our target 12% to 15% returns, we can often enhance these returns by monetizing mature assets to buyers with a lower cost of capital who value the long-life derisked infrastructure-like cash flows of renewable power projects. In 2024, our asset sales averaged a return of 25% and approximately 2.5x our invested capital, crystallizing strong returns for our shareholders and generating significant capital to fund further growth. Going forward, we expect asset recycling to continue as a reliable and consistent way for us to deliver strong returns for our shareholders and generate capital to fund growth. We expect to build off of the strong momentum in 2025 and deliver further monetizations in the future at similarly healthy returns. With that, I will hand the call over to Connor to take you through the remainder of the presentation.

Thank you, Patrick. The most important driver for our business continues to be the fundamentals for energy, which remain very strong today with digitalization and reindustrialization driving accelerating demand that far outpaces supply. This imbalance persists despite weaker market sentiment due to uncertainty of the impacts of tariffs and tax policy changes in the United States. Despite this uncertainty, renewables represent the most viable solution to meet the insatiable demand for energy, given their low-cost position, mature supply chain and ability to be deployed quickly in almost any region. With the strong underlying demand for power and the superior characteristics of renewables, we continue to be positive on the outlook for the business and our ability to pass along incremental costs from tariffs or tax policy changes to offtakers while continuing to deliver on our growth and return targets for shareholders. We believe that the pace of energy demand growth and need for both baseload power and adequate backup will require an any and all solution to build out the global electricity grid. This includes natural gas, nuclear technologies, batteries and renewables, all of which will play a role in delivering power. Following multiple decades of modest electricity demand growth, we are experiencing a dramatic shift in demand driven by the AI revolution, one of the, if not the most significant advancements in technology in our lifetime. This is driving a significant step change in demand for our product, supporting our continued and accelerating growth. Power is increasingly the bottleneck to enable data center and AI development, and we are seeing these businesses ramp up their efforts to lock in supply to ensure that they can achieve their growth targets. This significant increase in demand for new power being driven by corporate offtakers is resulting in the build-out of renewable generation given its position as the most cost competitive source of bulk power in most markets and its ability to be deployed quickly. We are well positioned as a partner of choice to the largest corporate buyers of power with a strong track record of delivering solutions. Last year, we signed a landmark renewable energy framework agreement with Microsoft, where we expect to deliver over 10.5 gigawatts of new renewable energy capacity in the United States and Europe between 2026 and 2030. This agreement is a testament to our differentiated offering, which is characterized by our significant access to capital and credibility to deliver scale clean power solutions from our extensive pipeline of advanced stage projects, which are well positioned from an interconnection and permitting perspective in many key data center markets globally. We continue to view the initial 10.5 gigawatts scoped into this agreement as the minimum that we will contract under the framework. The global hyperscalers are significantly ramping up investment in their data center infrastructure and are expected to continue to increase investment tremendously through the remainder of the decade. We expect to continue to partner with global technology players on both a project-by-project basis and via larger framework agreements given the persistence of the supply-demand imbalance we are seeing globally. To put it simply, nobody is better placed to provide clean power on a global basis to fuel accelerating digitalization and electrification globally. We are continuing to differentiate ourselves with our large operating fleet and expansive development pipeline, which now stands at 227 gigawatts, approximately 90% of which is located in the top 10 data center markets globally. Today, we are one of the largest renewable operators and developers globally, diversified across the lowest cost and most mature technologies and most attractive geographies, which mitigates our exposure to regional dynamics, market disruptions or resource variability. Our diversified global platform of 43 gigawatts of operating capacity generates high-quality, resilient and inflation-linked cash flows. We also have a robust funding model to deliver on our pipeline -- sorry, we also have a robust funding model to deliver on our growth, comprised of our asset rotation initiatives, which are expanding within our development pipeline, our opportunities for up financing on our hydro assets and with the issuance of corporate level debt and preferred equity while maintaining our investment-grade balance sheet. In the current environment, we are seeing support for each of our growth levers. And looking forward over the next 5 years, we have positioned ourselves well to achieve 10% plus annual FFO per unit growth in line or ahead of the previous 10 years. We look forward to connecting with you at Brookfield Renewables' Annual Investor Day, which is scheduled to take place on the 25th of December -- sorry, which is scheduled to take place on the 25th of September. That concludes our prepared remarks. We are now pleased to answer any questions. Jen, would you please announce our first question?

Mr. Chair, there are no questions to be addressed today.

Ladies and gentlemen, as there are no further questions or comments, I'd like to thank all of you for taking the time to join us today.