Polaris Renewable Energy Inc. (PIF) Earnings Call Transcript & Summary

Good morning, ladies and gentlemen and thank you for joining us today. My name is Jaime Guillen, and I am the Chairperson of the Board of Polaris Renewable Energy Inc. I will act as Chairperson of this annual and special meeting. On behalf of the Board, I wish to express thanks to those shareholders who have submitted their proxies in advance of today's meeting. Since this meeting is being held in a virtual-only format by a live webcast it is necessary to set out a few rules for the orderly conduct of this meeting. One, questions in respect of a motion can be submitted by a registered shareholder or duly appointed proxy holder using the instant messaging service of the Lumi platform. Please note that there may be a slight delay in the publication of the communications received. Two, when asking a question, please indicate your name and which entity you represent, if any. Three, questions will generally appear shortly after they are submitted, but will only be addressed during the question period at the end of the meeting provided that questions regarding procedural matters or directly related to the motions before the meeting may be addressed during the meeting itself. Four, for the purposes of the meeting today, voting on all matters will be conducted by a single electronic ballot. Registered shareholders and duly appointed proxy holders will be asked to vote on each business item after the presentation of all such business items. Only registered shareholders and duly appointed proxy holders of the company are permitted to participate in the voting. When you are asked to vote, you will receive a message on the Lumi platform requesting you to register your votes. If you completed a proxy in advance of the meeting and prior to the proxy cut off time your vote has already been tabulated according to your instructions. If you've already voted your shares by proxy prior to the meeting, you do not need to do anything at this time. However, note that if you have logged into today's meeting using your control number and you would like to change your vote, you have revoked any previously submitted proxies. And in order to have your vote counted, you will need to complete an electronic ballot during the allotted time. You will only have 3 minutes to do so later in the meeting. As we all know, unexpected glitches sometimes occur with electronic platforms. However, our service providers for this platform are very experienced at running virtual shareholder meetings and will provide support throughout this meeting. To request individualized support, please click on the support button on your screen. We will now proceed with the formal portion of today's meeting. I will move each item, and I have been advised by Mr. Murnaghan, the Chief Executive Officer of Polaris and a duly appointed proxy holder in attendance today, that he would be prepared to second each of the motions I so move. Accordingly, unless there are any objections, I will take such motions as seconded with no further action needed. I will remind you that only holders of common shares as of the record date for this meeting, being the close of business on May 3, 2023, or their duly appointed proxies are entitled to vote or ask questions at this meeting. You are a nonregistered shareholder, if you hold your shares through a bank or intermediary and you have not arranged to be appointed as proxy or such intermediary with respect to your shares. If there are any registered shareholders or duly appointed proxy holders who have inadvertently logged into the meeting as a guest, but intend to vote by online ballot during the meeting, please log back into the meeting as a registered holder or duly appointed proxy holder as per the instructions provided to you, so you can vote and/or ask questions at this meeting. I now call to order this Annual and Special Meeting of Shareholders. In accordance with the company's bylaw, I will preside as chair of this meeting. With the consent of the meeting, I would ask Anton Jelic, the company's CFO and Corporate Secretary, to act as Secretary of this meeting. I would also ask TSX Trust Company to act as scrutineer for this meeting to report on the number of common shares at this meeting to tabulate the votes on any ballot or poll taken at this meeting and to report to me as the Chair. The notice calling this meeting of shareholders was dated May 19, 2023, and was made available to all shareholders in accordance with the Business Corporation Act of Ontario and National Instrument 54-101. The purpose of today's meeting is set out in the notice of meeting. We have received an affidavit of mailing from our transfer agent indicating that the notice and access materials were properly mailed to the company's shareholders of record as of May 3, 2023, and made available under the company's profile on SEDAR. Accordingly, unless there is an objection, I will dispense with the reading of the notice of meeting. The notice and access materials were mailed to shareholders on May 19, 2023. Copies of the Notice of Meeting, Management Information Circular and form of proxy are available under the company's profile on SEDAR and the company's website. I direct that a copy of these materials, together with the proof of mailing, be attached by the Secretary to the minutes of this meeting. Pursuant to the by law of the company, quorum for the transaction of business at this meeting is 2 persons who are or who represent by proxy shareholders who, in the aggregate, hold not less than 10% of the issued shares entitled to be voted at this meeting. The scrutineer's report shows that there are 9,587,789 shareholders of common shares presented at this meeting. This represent a percentage of 45.6% of the total available, which is 21,025,774. I therefore declare that a quorum is present. I direct the secretary of the meeting to attach a copy of the scrutineer's final report on attendance to the minutes of this meeting. If you completed a proxy in advance of the meeting and prior to the proxy cutoff time, your vote has already been tabulated according to your instructions. If you have already voted your shares by proxy prior to the meeting, you do not need to do anything at this time. However, please note that if you have logged into today's meeting using your control number and you would like to change your vote, you have revoked any previously submitted proxies and in order to have your vote counted, you will need to complete an electronic ballot during the allotted time later on in the meeting. As due notice has been given in accordance with the OBCA and our articles and quorum is present, I now declare this meeting to be constituted for the transaction of business for which it has been called. During the course of this meeting, reference may be made to matters discussed in the circular. If you are unclear as to the meaning of certain terms, please refer to the circular or ask for a clarification at the appropriate time during the meeting. The first item of business is the presentation of the audited consolidated financial statements of the company for the fiscal year ended December 31, 2022, together with the auditor's report thereon. These materials have been made available to shareholders and are available on the company's website and under the company's profile on SEDAR. These financial statements are presented to the meeting, but no other action is required with respect to them. I will entertain questions with respect to the financial statements of the company in the general question period later on. The next item of business is to set the number of directors at 6 and the election of directors. We will only be nominating the following 6 persons to serve as directors of the company. Myself, Jaime Guillen, James Lawless, Marc Murnaghan, Marcela Paredes De Vasqez, Catherine Fagnan and Adarsh Mehta. As no nominations were received by the company in accordance with our advance notice policy, I declare the nominations closed. The former proxy for voting on the election of directors sets out each proposed nominee separately and allows shareholders to vote for each director individually. Is there any discussion on the motion? As mentioned at the beginning of this meeting, voting today will be conducted by a single electronic ballot. We will, therefore, continue with the next item of business, which is the reappointment of the company's auditors, and you will be prompted to vote on the election of each director after the presentation of all business items for this meeting. Unless there are any questions or discussions, I will move to the next item of business. Moving to the next side of our business. We will proceed with the reappointment of our auditors, PricewaterhouseCoopers LLP and the authorization of the Board of Directors to fix the auditor's remuneration for the 2023 fiscal year. Is there any discussion on the motion? The motion is now on the floor. You will be prompted to vote on the reappointment of the auditors after the presentation of all business items for this meeting. I will therefore move to the next item of business. The next item of business is the approval of a special resolution of shareholders to authorize the Board of Directors to set the number of directors within the range set out in the articles of the company in accordance with Section 125(3) of the Business Corporations Act of Ontario. As set out in the circular, before the company's continuance into the province of Ontario, the company was governed by the Business Corporations Act of British Columbia, which permitted the Board to appoint additional directors subject to certain limitations in between annual meetings. Since continuing into Ontario, and as a result of the company now being governed by the Business Corporation Act of Ontario, the company is required to seek approval from its shareholders by a way of a special resolution to empower the board to fix the number of directors and additional directors in between annual meetings. As stated in the circular to be passed, this item of business must be approved by a special resolution of shareholders. The text of this resolution is set out in Pages 10 to 11 of the management information circular. If approved, the Board will have the authority to appoint additional directors between annual meetings from time to time, provided that the number of directors appointed shall not exceed 1/3 of the number of directors then on the board, all in accordance with Section 125(3) of the Business Corporations Act of Ontario. Is there any discussion on the motion? The motion is now on the floor. You will be prompted to vote on the authorization for the Board to fix the number of directors from time to time. I will therefore move to the next item of business. The next item of business on the agenda is in relation to the ratification of the amendment to the company's bylaw. As set out in the circular, on May 3, 2023, the Board approved an amendment to the company's bylaw to include an advance notice requirement that is substantially similar to the one that was included in the company's article when it was governed under the Business Corporations Act of British Columbia. As stated in the circular, if approved the bylaw as amended, will continue to be effective in accordance with its terms. If not approved, the amendment to the bylaw will terminate and be of no further force and effect from and after the termination of this meeting. Is there any discussion on the motion? The motion is now on the floor. As previously mentioned, voting today will be conducted by a single electronic ballot. You will now be prompted to register your vote in respect of each of today's business items for this meeting. Please register your votes by accessing the voting page when prompted and pressing on the 4 or withhold buttons next to the name of each proposed director. And next to the resolution with respect to the reappointment of PricewaterhouseCoopers LLP as the company's auditors. Please register your votes by pressing 4 or against next to the special resolution authorizing the Board to set the number of directors from time to time. Please register your votes by pressing 4 or against next to the company -- next to the ordinary resolution ratifying the amendment to the company's bylaw. After 3 minutes, the electronic balloting will close and the voting page will disappear and your votes will be automatically submitted. We will wait a few moments for the completion of the electronic ballots and then move on to the remainder of the meeting. We will provide registered shareholders and duly appointed proxy holders approximately 3 minutes to complete the electronic ballots. Once voting is completed, I would ask that the scrutineer compile the report regarding the results of voting on all business matters. We will reconvene in a few moments with the scrutineers' report and the voting results. So I will now pause for a few minutes while the voting is being undertaken. [Voting]

Thank you for waiting. I have received the scrutineer's report and confirm the following. Each of the nominees put forward have been elected as directors of the company to serve until the next Annual Meeting of Shareholders or until their successors are elected or appointed. The reappointment of PricewaterhouseCoopers LLP as the auditors of the company has been approved, and the Board of Directors of the company has been authorized to fix their remuneration. The special resolution authorizing the Board to set the number of directors from time to time has also been approved. However, the ordinary resolution ratifying the amendment to the company's bylaw has not been approved. I direct that the results of the poll for the election of the directors be included in the minutes of this meeting announced in a press release in accordance with the policies of the TSX and filed on SEDAR. This completes the formal matters of business to be conducted today. Is there any other business that should properly come before this meeting? If there is no further business to be brought before this meeting, I move and in seconded that the formal portion of today's meeting be concluded. As a formal part of the meeting -- the business of this meeting of shareholders of the company has now been completed, I would like to ask Marc Murnaghan, President and CEO of Polaris Renewable Energy to provide a presentation following which we will hold a brief question-and-answer period. However, if you can just go back on more slide. However, before we do that, I did want to say a few words about our ESG initiatives and what the company has been doing over the last year with respect to our ESG. So as Polaris continues to grow, we remain committed to our belief that the long-term returns are bolstered by a healthy balance among our company shareholders, including equity and debt holders, our employees, our customers and the society and communities in which we operate and the environment itself. Last year, as you know, the company changed its name to Polaris Renewable Energy Inc. to further reinforce this belief. So it was something that we wanted to make sure that we signal to the market that this was something that we firmly believe and it was a core part of our strategy. I'm proud to say that during the last year, the Board, the management, employees, we spent hundreds of hours refining and enhancing the company's sustainability strategy. This was carried out across the entire organization and involves our employees in Toronto, Nicaragua, Peru, Panama, Ecuador and the Dominican Republic. It was done to ensure that as the company grew, our core principles and the strategy were clearly understood and implemented across the existing new and future jurisdiction. I encourage you to read the Polaris sustainability report as it not only reflects all of the sort that was done, but it truly sort of captures how the company is committed and delivering on this ESG policy, which, as I said, is part of our core aspects of our business. With that, I'll close my comments and pass the baton to Marc, who will give a brief presentation on the company. Marc?

Great. Thanks, Jaime. I'll just say a few very great words here. First, I'd like to actually thank all the employees for the efforts in the last 12 to 18 months. 2022 was a big year for us. We bought 3 acquisitions, and we executed the binary unit project with our team doing all of that work. And so I again, thank you for the team for all the efforts and we saw the benefits of that in the first quarter of this year 2023. We saw the financial benefits as well as the strategic benefits, I believe, meaning in 5 jurisdictions now. And the Panama project is now up and running as well. So that's great. And so we look forward to continuing to call it received the financial and strategic benefits of those efforts through the remainder of this year as well as executing on some other key projects which we have -- are in the middle of as we speak. So we are doing a battery project in Peru, which is going well, and we would expect that to be online Q3 of this year and that's in Peru. So that's the first real, call it, a battery project. And then we really look forward to getting that online and learning. And as we see that as an area that we're going to be growing into in the future with batteries and storage. In Ecuador, we are doing the expansion, the [ Private ] expansion that's excavations are ongoing, and we're managing that. And that is a little bit of a longer term of that. We would expect that to be finished and ready in Q1 of next year, but we're working on that, investing capital in that. And then very shortly here in Nicaragua, we are doing some well optimizations on 2 wells, aiming to improve the permeability and production of these wells. Those jobs should start at the end of July. And we'll have a sense of those results, call it, end of August, likely, early September which we think should be a good return on capital and risk reward for the company. And so these projects, those 3 that I just mentioned are all funded out of our cash flow. So we're continuing to pay dividends, pay down debt and grow the cash flows organically. As well as we also announced about 3 weeks ago, the signing of the PPA for Canoa 2. So we now have that, the power purchase contract agreed, which is great. And we are now in hoping to get going on construction as soon as possible and just working on finalizing the rest of the call it, development milestones so that we are able to start construction on our own and managing that as soon as possible. So that's really the update on the current activities, and we will -- the plan is to continue to grow in these jurisdictions, particularly the new ones that we added last year to continue to grow and diversify the business. And I look forward to executing on that with the team and the Board. And just on that, lastly, I would just like to say welcome to Catherine Fagnan and Adarsh Mehta, who are 2 new Board members in the company, and I know we'll very much benefit from their knowledge and experience. And so I just want to say welcome to them as a new Board members. So that's it, Mr. Chair.

Thanks, Marc. And I mean, I would like to echo the comments that Marc made in terms of all the effort and the work that was undertaken by the company last year. I mean it's -- we added new investments. We added new acquisitions, but we also added new jurisdictions. So the challenge was a double challenge. So one is to actually integrate the new operations, the new employees and ensure that they actually were operating under our culture, under our policies, under our procedures but also understanding the ins and outs and nuances of each of the new jurisdictions. So congratulations to everyone for the great work done. And as Marc said, we've got a strong pipeline and hopefully, we'll continue to execute and show new investments and additions to the portfolio. So -- but again, thank you, Marc. So now I ask that all attendings, who would like to ask a question at this time to use the instant messaging feature of the Lumi platform. We will answer as many questions as time permits. We do have a few minutes. [Operator Instructions] We'd like to remind you that only questions which were -- we would like to remind you that questions which were already answered or that are redundant or repetitive will not be published or answered at this time. So I'll just wait to see if there's any question. There being no question. We are now then concluding the question-and-answer portion of this meeting. So in conclusion, on behalf of management, our Board of Directors and our employees, I would like to take the opportunity to thank everyone for attending the meeting today. I would like to thank all of our shareholders for their commitment and continued support. We look forward to your attendance again next year. And thank you very much, and have a great day.