Boralex Inc. (BLX), a leader in the renewable energy sector, has reported a robust financial performance for the first quarter of 2024. The company's combined EBITDA saw a 14% increase to $218 million compared to the same period last year, while net earnings jumped by 62% to $73 million.
Adjusted Funds From Operations (AFFO) under IFRS also grew by 16%, reaching $78 million. These results reflect Boralex's disciplined project development and growth trajectory.
Key Takeaways
- Boralex's Q1 2024 EBITDA rose by 14% to $218 million, net earnings increased by 62% to $73 million, and AFFO under IFRS was up 16% at $78 million.
- The company's balance sheet remains robust with $575 million in available cash resources and authorized financing.
- New projects totaling 239 megawatts were added to the pipeline, increasing capacity to over 6.7 gigawatts.
- Wind projects in Quebec and Scotland and battery storage projects in Ontario are on schedule, with the latter commissioning in 2025.
- Despite not being selected for the NYSERDA expedited bid in New York, the company remains committed to reviewing and adjusting its strategy for future rounds.
Company Outlook
- Boralex is confident in the demand for renewable energy and is making progress in upcoming RFPs in France, the UK, Quebec, and Ontario.
- The company is on track with its battery procurement for Ontario projects, anticipating economies of scale.
- With a strong equity position, Boralex is well-positioned for the next 18 months, exploring various financing options.
Bearish Highlights
- Projects submitted for the NYSERDA expedited bid in New York were not selected, prompting a strategic review.
- The Canadian market is currently less competitive than the US market, though this is expected to change.
Bullish Highlights
- Boralex has a robust pipeline of projects under construction and ready to build, with significant growth in project capacity.
- The company has secured battery procurement for Ontario projects and is confident in achieving expected returns.
- Strong commitments from governments and corporations to reduce carbon footprints support the demand for Boralex's renewable energy solutions.
Misses
- Boralex acknowledged the challenges in the offshore sector, which limit alternatives for reaching renewable energy targets.
- The company is facing new tariffs on solar panels from China but has identified domestic production as a solution.
Q&A Highlights
- The company is comfortable with returns in Ontario, Quebec, and Europe and is addressing the challenges faced in New York.
- Tesla (NASDAQ:TSLA) will supply batteries for initial projects, with favorable terms negotiated for the North American supply chain.
- Boralex is exploring opportunities in Texas and other US states, as well as the data center industry in New Mexico and Texas.
- Uncontracted assets in France will be available from 2026, with potential direct agreements in Quebec depending on legal changes.
Boralex continues to navigate the renewable energy market with strategic foresight. The company's solid financial results and disciplined project development have positioned it well for future growth, despite the competitive challenges and market dynamics. With a focus on expanding its asset base and leveraging opportunities in both North America and Europe, Boralex remains a key player in the transition to sustainable energy. The next earnings call is scheduled for August 14, where the company will update its guidance for 2025 and discuss further developments.
Full transcript - None (BRLXF) Q1 2024:
Operator: [Foreign Language] Good morning, ladies and gentlemen, and welcome to Boralex First Quarter of 2024 Financial Results Conference Call. Note that all lines are in listen-only mode. [Operator Instructions] Also note that the conference is being recorded. For webcast participants, you can also ask questions during the conference, but they will be answered by e-mail after the call. Finally, media representatives are invited to contact Camille Laventure, Advisor, Public Affairs and External Communications. Her contact information is provided at the end of the quarterly press release. And I would now like to turn the conference over to Stephane Milot, Vice President, Investor Relations for Boralex. Please go ahead.
Stephane Milot: Well, thank you, operator and good morning, everyone. So welcome to Boralex first quarter results conference call. Joining me today on the call Patrick Decostre, President and Chief Executive Officer; Bruno Guilmette, Executive Vice President and Chief Financial Officer and other members of our management and finance teams. So Mr. Decostre will begin with comments about market conditions and the highlights of the quarter. Afterwards, Mr. Guilmette will carry on with financial highlights, and then we'll be available to answer your questions. As you know, during this call, we will discuss historical as well as forward-looking information. When talking about the future, there is a variety of risk factors that have been listed in our different filings with securities regulators, which can materially change our estimated results. These documents are available for consultation at sedarplus.ca. In our webcast presentation document, the disclosed results are presented both on a consolidated basis and on a combined basis. When talking about the results we generated refer to combined numbers and when referring to cash flow in balance sheet, we generally refer to consolidated numbers. So please note that the combined is a non-GAAP financial measure and does not have a standardized meaning under the IFRS. Accordingly, combined may not be comparable to similarly named measures used by other companies. For more details, see the non-IFRS and other financial measures section in the MD&A. So the press release, the MD&A, the consolidated financial statements and a copy of today's presentations are all posted on the Boralex website at boralex.com under the Investors section. If you wish to receive a copy of these documents, please contact me. So Mr. Decostre will now start with his comments. Please go ahead, Patrick.
Patrick Decostre: Thank you, Stephane, and good morning, everyone. It's a pleasure for me to present our results and achievements for the first quarter. Boralex had a good start to the year delivering strong growth overall, while continuing the disciplined development of our project. Combined EBITDA for the first quarter was $218 million, up $28 million or 14% over the same quarter last year. We benefited from strong production of wind farms and hydroelectric assets in North America, the commissioning of new assets in France and our strategy to optimize electricity selling prices in France. Net earnings was $73 million, up 62% compared to the first quarter of 2023 and the AFFO under IFRS was $78 million, up 16%. We continue to strengthen our balance sheet with $575 million in available cash resources and authorized financing, providing significant flexibility to fund our future growth. On the development side, our teams continued to make significant progress in our growth and diversification strategy. Our main project under construction and ready to build progress according to the plan. With our wind project, Apuiat in Quebec and Limekiln in Scotland expected to start operating at the end of 2024 as well as our first two battery storage projects in Ontario, Hagersville and Tilbury, expected to be commissioned in 2025. Finally, 239 megawatts of projects were added to our pipeline in the quarter, now representing over 6.7 gigawatts of capacity. Regarding markets conditions, I would say the demand for renewable energy remains high in all our core markets with strong commitments from the government to reduce their carbon footprints and strong demand from Corporation too. In Canada, the government has scheduled the adoption of the ITC for June 2024. This will have a very positive impact on our project in Quebec and in Ontario. I'm also very pleased to highlight our most recent win announced last week of 125 megawatt storage project in Ontario. In a very short period of time, we became the leader of this technology in Ontario and in Canada as well. We are very proud of our team and there is more to come. After our success in the recent RFPs, our teams are already preparing response since to upcoming tender in Quebec and in Ontario. In the United States, NYSERDA announced the conclusion of the expedited RFP, but did not publish the list of companies selected. The project that won are expected to be disclosed as contract are signed. NYSERDA, however, indicated to Boralex that the project it had submitted totaling 240 megawatts were not selected. Next solicitation is expected to be launched in May 2024. Boralex will review the request for information document and will establish its strategy for this request for proposals. In Europe, our teams are also working on the upcoming RFPs in France and in the UK. I will now rapidly cover the main variances in our portfolio of project and gross balance. The change in the pipeline was mainly due to the addition of solar and storage project in North America in the early stage, the addition of solar and wind project in Europe in the early stage, and the transition from the early stage to the advanced stage of storage project totaling 525 megawatts in North America. In total, our pipeline in early, mid and advanced stages project now comprises project totaling 5.8 gigawatt of wind, solar and storage projects. There were not a lot of change in our growth path during the first quarter, except the commissioning of a 21 megawatt wind project in France. I won't go in detail through the progress made in our growth and diversification strategic direction as I have already talked about the major highlights. On the customer strategic direction, we continue to have advanced discussion with different corporations in France as the demand for renewable energy contracted at attractive price remains high. This completes my part. I will now let Bruno cover the financial portion in more detail and we'll be back later for the question period. Bruno?
Bruno Guilmette: Thank you, Patrick. Good morning, everyone. I will start with the review of the progress made in light of our 2025 corporate objectives. As mentioned earlier by Patrick, our balance sheet is solid with $575 million in available cash resources and authorized financing. Total debt remains stable in the first quarter of 2024 with project debt representing 85% of the total. We continue to make good progress on the EBITDA and AFFO front. The reinvestment ratio is in line with our target. Lastly, on our corporate objectives, we continue to make good progress on our CSR strategy as presented on Slide 17. We are also preparing for CSRD and ISSB regulations and have just started our double materiality analysis. For more detailed information, including data on CO2 emissions and work done in relation to climate change and the TCFD initiative, invite you to read our fourth CSR report, which was published in February. I will now cover the financial results for the first quarter starting with production. Overall, total wind production for the quarter combining Canada, the U.S. and France was 4% higher than last year, but 2% lower than anticipated. Total production for the hydro sector was 9% higher than last year and 27% higher than anticipated. Both markets, Canada and U.S., had favorable weather conditions. Finally, production from solar assets was 19% lower than the same quarter last year, 22% lower than anticipated, mainly due to curtailment at the Five Point solar farm in California. In summary, total production for the quarter was 3% higher than last year, at 1% lower than anticipated. The quarter combined revenues were down 11% compared to last year, mostly due to lower merchant prices in France. EBITDA increased by 14% in the first quarter and operating income increased by 31%. As mentioned by Patrick, the growth came from higher production in North America, new assets commissioned in France and the positive effect of our commercialization strategy in France. On this last point, please note that the major contributor was the price effect of newly commissioned assets, notably Moulin du Lohan, which benefited from higher selling price in the first quarter of this year compared to the first quarter of last year, thanks to our commercialization strategy. To a lesser extent, assets impacted by the French price gap had a small positive contribution to EBITDA. On a consolidated basis, AFFO was $78 million compared to $66 million in the same quarter last year. Our financial position remains very solid with a net debt to total market capital ratio of 44%. In conclusion, it's a good first quarter for 2024 as we continue the disciplined execution of our strategic plan. We increased combined EBITDA, net earnings and AFFO compared to 2023. We maintained a solid financial position with $575 million in available cash resources and authorized financing to support our growth. And finally, we made good progress along our four strategic orientations. Thank you for your attention. We are now ready to take your questions.
Operator: [Operator Instructions] We’re now going to proceed with our first question. And the questions come from the line of Nelson Ng from RBC Capital Markets.
Nelson Ng: Just first question relates to New York. Just a quick question. Was the NYSERDA expedited bid that where you submitted 240 megawatts, was that purely based on price?
Patrick Decostre: Yes, the answer is yes. It was -- there was -- I'm so sorry, good morning, Nelson first. The answer is yes. And we don't know exactly what was the last accepted say price by NYSERDA and we will know that when it would be published. And as I mentioned in my speech, we are waiting to see what will be the rules for the NYSERDA and to decide our strategy of bid for this one.
Nelson Ng: So I guess regardless of the strategy, does that imply that you would need a lower price in the next round? And then, I guess the other question is, like historically has RFPs had a big non-financial component to make the bids more competitive?
Patrick Decostre: What we will do is we will remain disciplined in the way we will bid. I am obviously disappointed not being selected, but I'm not disappointed to have respected our limit of return and acceptable return for Boralex. And we have many opportunities in our targeted geographies: Quebec, Ontario, France, the UK and NYSERDA obviously. But if NYSERDA, if the price in New York remains lower than the one we think we should get to have an acceptable return, we will review our strategy. What I think too is on the different project we bid last time, there was one, say, large project of 140 megawatt, but there was also some smaller project of 20 megawatt. I have more question of the 20 megawatt project than on the other one. But definitely, we will see what will be the competition for the next day. And NYSERDA has reconfirmed their objective of 70% of renewable energy in '23. So they need to have project online for this time and our project are able to do it. There is also lots of they are ready to build and there are also lots of difficulty on the offshore side. So they have not a lot of alternative to catch their 70% in '23.
Nelson Ng: And then just shifting to Ontario. So you have two projects that are or two battery storage projects that are due to be commissioned next year and the third one in, I think, '27 or '28. Can you just provide a bit of an update on your battery procurement strategy? And also, are you kind of factoring in any economies of scale for whether it's construction or operations of the facilities?
Patrick Decostre: Yes. Essentially on the on Hagersville and Tilbury, we have secured all the procurement, meaning batteries and balance of plant batteries that have been contracted with Tesla. So we are going for, I would say, number one technologically and number one in knowledge of the Ontario system and rules. So that's not -- there is no risk on this side. Balance of plant has been contracted too at price which are totally in line with our budget. So that's why I'm confident we will reach the expected return on these projects when they would be connected next year. Yes, there will certainly be economies of scale with Oxford since Oxford is not far away from Hagersville. It's the same First Nation partner, it's the same area for operation and is in the area of Niagara Peninsula where we already operate a large wind farm, as you know of 230 megawatt. So yes, there is more to come and we are preparing for the LT2 to continue on Ontario for the LT2 procurement, the next RFP that will come for production for different production and say hybrid projects.
Nelson Ng: And then just one last question, you mentioned that it's everything's kind of on budget. Can you provide a bit more color on like the rough project costs for the two battery storage projects?
Stephane Milot: It's pretty much in line with what we've said in the past, Nelson. So if I recall, we were, it's okay. But the two Ontario projects were about $800 million exactly.
Operator: And the question comes from the line of Mark Jarvi from CIBC.
Mark Jarvi: Coming back to the bids in New York, was there anything in terms of supply chain costs, tax equity assumptions that made you bid more conservatively and will impact sort of how you bid in the next potential RFPs?
Patrick Decostre: No, I'm not sure that we have taken two, say, conservative assumptions. When I'm looking to accepted price by NYSERDA last year in offshore, which are public, last year in solar, which are also public. I think we have the right strategy. We need to have more details of the results to be able to really understand why we have not been selected. But definitely balance of plant is quite expensive in New York when you compare to other jurisdiction. My comment on smaller project, there are some fixed costs typically grid connection cost even if it's in low voltage, which is also there is no economies of scale on this. So there are some small points, but I -- we will see we need more analysis to answer definitely your question, Mark.
Mark Jarvi: And then with the new tariffs announced from the Biden administration this week, solar panels from China, how does that impact in terms of how you're thinking about sourcing solar equipment in the U.S.?
Patrick Decostre: That's potentially one answer to your first question that we have looked to be protected from this type of risk in our last bid. So we have anticipated that such action was forthcoming from the U.S. government and we have identified domestic production, but it's definitely not the cost of Chinese. So I don't know. I think we are -- our team is up-to-date on this and this is also something that maybe an uncertainty on the NYSERDA previous bid.
Mark Jarvi: Last question for me, just updated outlook for M&A, any updated view in terms of geographies, asset types or even size of deals where you're finding maybe a sweet spot to be able to opportunistically buy assets? And is the focus sort of on combination of operating and development pipelines, operating or more on our development side?
Bruno Guilmette: Hi, Mark. The ideal target would certainly be a mix of operating assets, which we can improve on with our experience, good pipeline of projects that and currently, we see those pipelines as a more attractive valuation and some team and expertise, especially where we're developing a bit more either, for example, U.S., UK or we don't have, we have less people on the ground compared to Canada and France. So that would be the ideal target. The M&A market in our view is interesting. There's probably more sellers than buyers at the moment, which means that potentially attractive valuations, and we keep a close eye on the market. Having said that, we do not need to make an acquisition if it's not strategic and if it's not at the right return. So we'll just continue to look for the right target.
Mark Jarvi: Have you made any binding offers on any portfolios and missed out?
Bruno Guilmette: We're not going to disclose our non-events or non-announced.
Mark Jarvi: I guess my question would be, do you have a sense of where clearing prices are today on processes in terms of where you think return hurdles are right now to get a successful bid?
Bruno Guilmette: We certainly continue to talk to people in our core markets. And so we have a good idea on the market, boss.
Mark Jarvi: And is that at a level that's comparable to organic returns or slightly lower given maybe there's less risk on development and your buy them operating cash flow in assets?
Bruno Guilmette: We continue to believe that organic development offers a premium. It's essentially a risk premium and we're good at taking those kinds of risks. So we continue to favor in general our organic development and allocate more dollars towards that. And we see a lot of opportunities on organic, on the organic side.
Operator: We are now going to take our next question. And the question comes from the line of Robert Hope from Scotiabank.
Robert Hope: I want to go back to the battery conversation. I guess more broadly, how do you think about Boralex's competitive advantage or key point of differentiation in standalone storage assets similar to what you just did in Ontario?
Patrick Decostre: Yes. The first point is we start redeveloping in Ontario before all others and we started probably three years before to analyze where the system will need something. And when I say something, we discussed about is it battery storage, is it hybrid site or is it production. And so we identified our battery storage portfolio before the others make the partnership with the First Nations, make the partnership with the municipality. And so that's what one thing and that's important because there is no some non-price points in these RFPs. The second point is, I think we have worked also a lot on the modernization of the revenue of the 30%, which are not covered by the contract of the 22 year contract with the ISO. And I think this is a second one. We have analyzed a project in Ontario, which is well known before. And so we have gone into all the model before the RFP. And I think last but not least, the way we are doing our partnership with First Nations is something which give us a real advantage on the Ontario project.
Robert Hope: And then maybe just taking a look at the development pipeline, as it seems like overall demand is kind of pivoting upwards across many jurisdictions. Where do you think you need to add some development projects? And can you just walk us through kind of your -- just the amount of projects that you could be adding to the development pipeline?
Patrick Decostre: I think essentially starting in Canada. Since we have been very successful in Quebec and in Ontario, we are working hard to have new projects for the next RFP and there will be. But it's -- when you are successful by definition you empty a little bit your funnel of project. So we are working on this and I'm confident. Potentially, there will be other places in Canada but I will not go further today, but where we are thinking that it's the condition could be of interest. In Europe specifically we are pushing hard in the UK, we just promote a person, Julie Cusson, who was on my executive team to supervise and lead the UK development operation, all the UK team to accelerate there. It's a large market, there is a lot of need of electricity. The nuclear fleet in UK, the old AGR nuclear fleet gas cooled reactor will be closed in probably 2027 and the new reactor will be there just in 2030, 2032. So there is lots of room for new production. And finally, France, I'm not -- we would not invest more than what we're investing today. We have a good pipeline. We're there since 20 years. And finally, in the UK, we will continue say our disciplined approach, analyze NYSERDA RFP proposal for the next round and see how much we have to invest in the U.S. for the next year.
Operator: We are now going to proceed with our next question. The questions come from the line of Rupert Merer from NBF.
Rupert Merer: So we've seen results of RFP processes in Ontario, Quebec and New York. You've had some projects that have been accepted in Quebec and Ontario and of course some that have not in Ontario and New York. Just wondering, if you can comment on your return targets in those markets if they are at about the same level? And if you will adjust your return targets at all in the future based on results that you've seen?
Bruno Guilmette: Yes. We keep monitoring that Rupert. Clearly, we consider overall the potential returns we can see in our different markets. Looking at Ontario, we've been successful on what we wanted and it's normal that we'll win our fair share of projects. But we've been able to continue to do that which means that our return expectations are generally competitive and at the same time very much reflects our disciplined approach. So they'll be 10% plus and in certain cases, they'll be even more than 12%. So we're comfortable with the returns in Ontario and Quebec. We're comfortable with -- we continue to be comfortable with the returns we see in Europe. And as Patrick mentioned, the New York projects were not successful and we're analyzing that. It's fairly recent. We're analyzing that with the team to see what are the RFP winners made those kinds of returns. At the end of the day, we want to make sure that we offer competitive projects, which we can build and it's important for us.
Rupert Merer: So looking at your -- sorry, go ahead.
Patrick Decostre: No, generally speaking, the demand is stronger than ever in our business. And so we can be more selective and disciplined. And so we have as Bruno seen between is that we have a ladder of expected return when we are able to bid many project at the same time. So we are working hard to be ready to have projects for the next bit because we have been so successful.
Rupert Merer: And so based on the information you have with bids into those markets, it seems like the Canadian market is a little less competitive than the U.S. market today. Are you seeing that in your returns? Are you able to get better returns here? Is there less competition in Canada? And does that inform your future strategy or where you want to allocate capital?
Patrick Decostre: Yes. It's our view today. I think normally in the textbook what it said is when a market is less competitive, it doesn't last forever. So we need to be to remain really good2 and in development. And but yes, today the Canadian market is a little bit less competitive, because it's complex to make partnership with municipality First Nations and definitely the U.S. market attract more international investors in the past. So I think the volume of the U.S. market attract more people. But I'm not -- I don't think it will last forever. So we need to continue to be very good and I'm very confident in the capacity of our team to do this.
Operator: We are now going to proceed with our next question. And the questions come from the line of Nicholas Boychuk from Cormark Securities.
Nicholas Boychuk: Coming back to the battery and energy storage angle. Patrick, I think you mentioned that the batteries for the initial projects are going to be secured by Tesla. Can you comment on the depth of the supply chain that you're seeing? Is Tesla now identified as the primary opportunity that you would want to deal with? Or if you were to put, say, a bid out to buy more batteries, this would be a very competitive market with potentially cost declining a lot over the coming years?
Patrick Decostre: What I think our experience on the RFP of procurement was that there was lots of interest for our project because there are significant in term of power, the size and also in term of hours. It's 4 hours, not 2 hours. So it's double the size of the number of batteries. So we had a quite say customer oriented RFP and we have been able to negotiate. So I think again, I have no clue for the future exactly, but my understanding is that in the recent time, the battery supply chain is strong, specifically North America for the -- we don't have the same issue than we can have on solar panel in the U.S. and so that's a good news. And commercially, it was not easy but it was a very correct negotiation.
Nicholas Boychuk: And if you're thinking of the duration there, you mentioned 4 hours. Is there a key tipping point where you would maybe start to explore other alternatives, other types of technologies other than lithium?
Patrick Decostre: The 4 hours in that case is the part of the rules of the RFP. So it really depend of the need of the electricity system. In Ontario that was 4 hours, if there is -- it will depend on the RFP rules and we will not go on the other side. Boralex will not develop battery project where it's not significantly contracted like we have in Ontario. I think the Ontario business is a very good one. We have our fair share of it and we are very prudent on the business model of on which we finance our battery storage project.
Nicholas Boychuk: And that particularly leads to the next question about the similarities or differences between the battery, energy storage markets that you're seeing elsewhere. I think in Europe and France, you've got some battery energy storage projects in the early and mid-stage. Can you comment on the similarities and the differences between the Ontario versus, say, French or any other European market?
Patrick Decostre: But without going into all the technical details but the European system is synchronized from south of Portugal to the east of Poland. So it makes the system more reliable and there is less demand for, because there is more interconnection in a bigger system than when you look to say Ontario or Quebec or the UK. So you can have local demand like we have in Brittany or like can happen in Northern UK or Southern UK because you have a smaller system and you have to transport the electricity. So it's really a question which is very, very technical to analyze where you want to connect. And typically the two small project we have in France have been financed through completely different way we are supporting the frequency regulation of the grid. On one side, we bought it at a very cheap price because it was a R&D project and we bought it at the end of the program for I think 120 of the initial price. It was very early. It was almost 10 years ago that we did this. And in Brittany, we have been supported because we helped the system on voltage regulation on top of frequency regulation. So it's completely different system. So it's very important to analyze this and typically we're analyzing to put battery storage on project in Texas, but it's completely different and we're just at the analyzing the things because the model is less how to say predictable, the business model is less predictable than the Ontario one.
Operator: We are now going to proceed with our next question. The question comes from the line of John Mould from TD Securities.
John Mould: Bruno, maybe just starting with the equity needs of the company. Can you maybe just speak to how far out you're looking at this point before you may need external equity, just given that you don't have now having not one in the NYSERDA RFPs, you don't have what might have been an accelerated U.S. slower build. I think you've been talking about those projects potentially being online in certainly early 2026? So, can you give us a sense of where that stands at this point?
Bruno Guilmette: Yes. Clearly, we're well positioned enough from a balance sheet perspective and from a financing perspective, we're looking at this. At the moment, we're certainly looking 18 months ahead without any to issue equity. We continue to look at potentially continuing to do recycling of capital, recycling of assets, sell down in either non-strategic or just sell down of minorities to financial partners. So we have different options. The market for project finance is quite strong. We're advancing very well on our -- the financing of our Limekiln project and the battery storage. So overall, if I look at 18 months down the road, is we're very well financed. And if I look even beyond that, as I said, with the other opportunities we have in the portfolio, we can continue to finance. It will really depend on the next RFPs. As you know, we have many RFPs coming in our different markets. So it will really depend if we continue like that. But certainly and the ITC, which is touch wood, the ITC should be finalized at the Canadian federal level before the end of May or early June. So with all of these different optionalities for financing, we're comfortable on the equity side.
John Mould: And maybe just following up on your comments on capital recycling. Just given that equity need horizon seems to have been at least consistent, if not kind of pushed out a little bit. Does that reduce the focus on capital recycling or the need for it? Or are you really looking at that also in an opportunistic basis? And if you see the right transaction coming come along, you might move ahead with one even though your equity needs aren't immediate?
Bruno Guilmette: It's both opportunistic and the best -- the lowest cost to finance. So we'll look at our different opportunities, whether it be asset recycling, whether it be corporate debt, whether it be project finance. We always look to measures and we're looking and we're actually active on a few refinancings. So we're always looking to find ways to finance within our portfolio first, if it makes sense again from a timing perspective, as I think you're alluding to, just making sure it's the right time. So having options, which we do, is great. Having options on the financing side is great. So and we're not, I mean, we are -- we have those options because we look ahead and try to plan for our future needs. And we do factor in a few projects that we expect to win, which at the moment is generally quite good.
John Mould: And then maybe just one on U.S. growth. Patrick, more broadly, you just mentioned that you were in the early stages of analyzing batteries in ERCOT. Beyond your New York efforts, could you maybe give us sense of right now where you're seeing the best opportunities to spend development dollars in the U.S.? And what might be the next market or areas of the country that are the most interesting markets for Boralex right now?
Patrick Decostre: Yes, essentially we are looking to the optimization of our assets in Texas and New Mexico. There are lots of demand for, there is new demand coming there can go from the buzzword of AI and data center, but also ethanol or other things which are coming from low electricity price. We have assets, we need to optimize them, we can repower them. So we're working around this. And so that's the first things outside of New York and we have also look, as I mentioned previously to other states Pennsylvania and Illinois. But on the other side, there is so much interesting business to do in Canada, in Quebec and Ontario then we are looking to allocate our development resource cost -- cash and people to today's jurisdiction more than we expect two years ago. So that's where we are today with the U.S. And definitely, if we have, as Bruno mentioned an opportunity on M&A, which is interesting because it brings organic teams development that we are looking to that precisely in the U.S.
Operator: [Operator Instructions] We are now going to proceed with our next question. The questions come from the line of Ben Pham from BMO.
Ben Pham: Maybe just to start off, could you share your overall thoughts on the data center opportunity? I know you mentioned New Mexico. Talk about maybe your positioning, your assets outside of New Mexico for that. And can you also remind us what assets are uncontracted either today or coming off contract in the next few years?
Patrick Decostre: Yes. Essentially, when I look to our asset base, we have indeed one asset in New Mexico and one asset in Texas in ERCOT, which where we are we have this possibility. There is not only data center, there is other demand indeed. And when I look to assets which are also available for the future brownfield assets in France, we have more demand from say traditional industry like materials, commodities, say supermarket, IT, telecom than data center in France presently because there is this switch of the high intensive energy demand to make it green, which is also a big driver of the demand. And when -- even in for example in Quebec, there is also a lots of energy intensive like steel production, aluminum production. And there are more the drivers of the demand for the long-term, which is I think good also. And it's not just the data center and AI. I think Texas for us since we have this footprint, it's a place where there could be opportunity. And if it brings, if we learn on this opportunity then it can be bigger for the future. But I want to be sure that it's not just attendance and that it's just something which will last for long-term like all other big industry.
Ben Pham: And then your French uncontracted that's mostly the 350 megawatts?
Patrick Decostre: Yes. It's essentially because when we, if you remember, we took the decision in 2022 to early terminate contract, which normally -- naturally would end up to 2026. So there was contract with an end in all in between. And we recontract up to 2026 these assets. So we have roughly, yes, 350 megawatt that will be available from 2026 and after for to sell the electricity and we're discussing with many corporation because there is a lot of demand and there is not so much assets on the market available and also teams skilled like ours to be able to make the right contract for the IPP and the customer.
Ben Pham: And maybe just to continue on that thought. In Quebec, last month, IBM (NYSE:IBM) announced a chip plant, and I know you have some relationships with IBM. I'm just wondering, like, for something like that, is that just from a market share perspective, is that is that something more someone like a power company could take advantage of? Is it always maybe more tilted towards the utility like Hydro-Quebec?
Patrick Decostre: Today, by law, it's not permitted in Quebec to do direct agreement. So yes, IBM is one of our customer in France and there could be interest elsewhere in the world. We have that with other customers already. My understanding is that there could be change in the law because there is a new law that will come into force probably by the end of the year. It's not yet clear how much it will be allowed to do direct agreement with customer. What is clear is that Quebec economy globally will need more power and maybe a way to finance them directly through private investors is to have this kind of direct agreement. So definitely, if we are able to supply power to IBM in Quebec, thanks to our relation in France, we will go for that and vice-versa.
Ben Pham: And maybe the last one is on your guidance and you have the 2025, how are you thinking about the timing of perhaps refreshing that or even extending the timeframe?
Patrick Decostre: Essentially, what we are doing is we are already working because environment has changed a lot from 2021, lots more opportunity, differentiation of the supply chain, differentiation with RFPs and jurisdiction in 2021. Typically Canada was almost not on the map for development. So we are working on this. I don't know yet when we will come to the market, because we have to work on this and refine and approve where we want to go, but we're already working on this.
Operator: We have no further questions at this time. I will now hand back to you for closing remarks. Thank you.
Stephane Milot: All right. So thank you everyone for your attention. If you have additional questions, please call me at 514-213-1045. I'll make sure we quickly answer your questions. So our next call to announce third quarter results will be on Wednesday, August 14 at 11 a.m. Have a nice day, everyone. A great summer with exciting vacation in [Parish Noire].
Patrick Decostre: Thank you.
Operator: This concludes today's conference call. Thank you all for participating. You may now disconnect your lines. Thank you.
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