TransAlta Reports Fourth Quarter and Year End 2025 Results, Announces Data Centre Agreement, Declares Dividend Increase and Provides 2026 Outlook

Executive Summary

• TransAlta Corporation reported its financial results for the fourth quarter and full year ended December 31, 2025, highlighting strong operational availability and free cash flow performance despite softer Alberta power prices.
• The company announced an 8% increase in its common share dividend to $0.28 per share (annualized) and provided 2026 guidance, projecting Adjusted EBITDA of $950 million to $1,050 million and Free Cash Flow of $350 million to $450 million.
• Significant strategic developments include the closing of the Far North Power acquisition in Ontario, the signing of a tolling agreement to convert Centralia Unit 2 to natural gas, and an MOU for data center development in Alberta with CPP Investments and Brookfield.

Key Details

• Q4 2025 Financials:
  • Adjusted EBITDA: $247 million (vs. $282 million in Q4 2024).
  • Free Cash Flow (FCF): $93 million ($0.31 per share) (vs. $46 million or $0.15 per share in Q4 2024).
  • Adjusted Earnings Before Income Taxes: $14 million (vs. $38 million in Q4 2024).
  • Net Loss Attributable to Common Shareholders: $62 million ($0.21 per share) (vs. $65 million or $0.22 per share in Q4 2024).
  • Cash Flow from Operating Activities: $231 million ($0.78 per share) (vs. $215 million or $0.72 per share in Q4 2024).
• Full Year 2025 Financials:
  • Adjusted EBITDA: $1,104 million (vs. $1,255 million in 2024).
  • Free Cash Flow (FCF): $514 million ($1.73 per share) (vs. $575 million or $1.90 per share in 2024).
  • Adjusted Earnings Before Income Taxes: $181 million (vs. $396 million in 2024).
  • Net Loss Attributable to Common Shareholders: $190 million ($0.64 per share) (vs. Net Earnings of $177 million or $0.59 per share in 2024).
  • Operational Availability: 92.3% (vs. 91.2% in 2024).
  • Production: 24,521 GWh (vs. 22,811 GWh in 2024).
• 2026 Outlook:
  • Adjusted EBITDA: $950 million to $1,050 million.
  • Free Cash Flow: $350 million to $450 million ($1.18 to $1.51 per share).
  • Dividend: $0.28 per share (annualized).
  • Market Assumptions: Alberta spot price $40-$60/MWh; AECO gas price $2.65-$3.15/GJ.
• Strategic Transactions & Developments:
  • Dividend Increase: Board approved an 8% increase to $0.07 per quarter ($0.28 annualized), payable July 1, 2026.
  • Far North Acquisition: Closed on Feb 2, 2026, for $95 million. Adds 310 MW of natural gas capacity in Ontario.
  • Debt Refinancing: Issued US$400 million senior notes at 5.9% coupon (maturing 2034) to redeem existing 7.8% senior notes. Net proceeds were $541 million (US$393 million).
  • Centralia Unit 2 Tolling Agreement: Signed long-term tolling agreement with Puget Sound Energy to convert 700 MW facility from coal to natural gas. Fixed-price capacity payment through 2044. Estimated capital cost ~US$600 million. FID expected early 2027; operations late 2028.
  • Data Centre MOU: Signed MOU with Canada Pension Plan Investments and Brookfield for data center development at Keephills site, Alberta. Initial PPA for ~230 MW, with potential for up to 1 GW.
  • CEO Succession: John Kousinioris to retire April 30, 2026. Joel Hunter (current CFO) appointed to succeed him as President and CEO.
  • Sheerness Unit 1 Mothballing: Notice given to AESO to mothball Unit 1 effective April 1, 2026, for up to two years.
  • Demand Transmission Service: Entered into 230 MW contract with AESO for data center load integration.
• Segment Performance (Full Year 2025 Adjusted EBITDA):
  • Hydro: $285 million (2024: $316 million).
  • Wind and Solar: $338 million (2024: $316 million).
  • Gas: $438 million (2024: $524 million).
  • Energy Transition: $100 million (2024: $89 million).
  • Energy Marketing: $85 million (2024: $146 million).
  • Corporate: $(142) million (2024: $(136) million).

Notable Quotes

• "TransAlta delivered strong performance in 2025, demonstrating its ability to generate solid free cash flow notwithstanding softer Alberta power prices, subdued market volatility, and lower merchant production. Our hedging strategy and contracted portfolio supported our strong ongoing performance and helped offset a challenging price environment." — John Kousinioris, President and CEO
• "I'm pleased to share that free cash flow came in above the midpoint of our 2025 Outlook." — John Kousinioris, President and CEO
• "We are pleased to announce that our Board of Directors has approved an eight per cent increase to our common share dividend... This represents our seventh consecutive annual dividend increase, affirming our confidence in the Company’s future and commitment to returning value to shareholders." — John Kousinioris, President and CEO
• "Over the past few months, we focused on executing our strategic priorities. During the fourth quarter, we secured a definitive tolling agreement to convert Centralia Unit 2 to natural-gas-fired generation under a long-term contract and today, we announced the signing of a memorandum of understanding for our Alberta data centre strategy with Canada Pension Plan Investments and Brookfield... We also recently closed the acquisition of Far North which enhances our position in Ontario." — Joel Hunter, EVP Finance and CFO