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

TransAlta Corporation (TransAlta or the Company) (TSX: TA) (NYSE: TAC) today reported its financial results for the fourth quarter and year ended Dec. 31, 2025. “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" said John Kousinioris, President and Chief Executive Officer of TransAlta. "I'm pleased to share that free cash flow came in above the midpoint of our 2025 Outlook." "We are pleased to announce that our Board of Directors has approved an eight per cent increase to our common share dividend, now equivalent to $0.28 per share on an annualized basis. This represents our seventh consecutive annual dividend increase, affirming our confidence in the Company’s future and commitment to returning value to shareholders,” concluded Mr. Kousinioris. "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," said Joel Hunter, Executive Vice President, Finance and Chief Financial Officer. "We also recently closed the acquisition of Far North which enhances our position in Ontario," added Mr. Hunter. "We are entering 2026 with a growing and diversified fleet that is underpinned by long-term contracts and strong hedging positions. Our guidance incorporates a balanced view of our fleet's expected generation as well as Alberta power market fundamentals, which we expect to markedly improve as expected data centre load growth comes online in the coming years. We look forward to sharing more with you on our long-term outlook and strategy at our upcoming Investor Day scheduled for March 23, 2026," concluded Mr. Hunter. Fourth Quarter 2025 Highlights Achieved strong operational availability of 90.1 per cent in 2025, compared to 87.8 per cent in 2024Adjusted EBITDA(1) of $247 million, compared to $282 million for the same period in 2024Free cash flow (FCF)(1) of $93 million, or $0.31 per share, compared to $46 million, or $0.15 per share, for the same period in 2024Adjusted earnings before income taxes(1) of $14 million, compared to $38 million, for the same period in 2024Cash flow from operating activities of $231 million, or $0.78 per share, compared to $215 million, or $0.72 per share, for the same period in 2024Net loss attributable to common shareholders(1) of $62 million, or $0.21 per share, compared to $65 million, or $0.22 per share, for the same period in 2024 Full Year 2025 Highlights Achieved strong operational availability of 92.3 per cent in 2025, compared to 91.2 per cent in 2024Adjusted EBITDA(1) of $1,104 million, compared to $1,255 million for the same period in 2024Free cash flow (FCF)(1) of $514 million, or $1.73 per share, compared to $575 million, or $1.90 per share, for the same period in 2024Adjusted earnings before income taxes(1) of $181 million, compared to $396 million, for the same period in 2024Cash flow from operating activities of $646 million, or $2.18 per share, compared to $796 million, or $2.64 per share, for the same period in 2024Net loss attributable to common shareholders(1) of $190 million, or $0.64 per share, compared to net earnings attributable to common shareholders of $177 million, or $0.59 per share, for the same period in 2024Announced an annual dividend increase of eight per cent, now equivalent to $0.28 per share on an annualized basis, which represents the seventh year of consecutive dividend growthProvided 2026 Outlook including adjusted EBITDA of $950 million to $1,050 million and FCF of $350 million to $450 million, or $1.18 to $1.51 per shareReduced scope 1 and 2 GHG emissions intensity in 2025 to 0.31 tCO2e/MWh from 2024 levels of 0.35 tCO2e/MWhReduced scope 1 and 2 annual GHG emissions by 30.7 million tonnes of CO2e or 76 per cent since 2015, achieving our goal of a 75 per cent reduction by 20262025 Total Recordable Injury Frequency of 0.12 compared to 0.56 in 2024 Fourth Quarter and Year Ended 2025 Operational and Financial Highlights Segmented Financial Performance 1. These are non-IFRS measures and ratios, which are not defined and have no standardized meaning under IFRS and may not be comparable to similar measures presented by other issuers. Refer to the "Segmented Financial Performance and Operating Results" section of this news release for further discussion of these items. Also, refer to the "Non-IFRS and Supplementary Financial Measures" section of this news release for more information regarding these non-IFRS measures and ratios, including, where applicable, reconciliations to measures calculated in accordance with IFRS.2. On Dec. 4, 2024, the Company completed the acquisition of Heartland Generation, which added 1,747 MW to gross installed capacity, excluding the Poplar Hill and Rainbow Lake facilities (collectively, the Required Divestitures). Refer to the "Significant and Subsequent Events" section of this news release. IFRS financial statements include the results attributable to the Required Divestitures up until the date of disposal, in accordance with a consent agreement entered into with the Commissioner of Competition for Canada. Our non-IFRS measures and operational Key Performance Indicators exclude the results of the Required Divestitures.3. Adjusted net (loss) earnings attributable to common shareholders per share, funds from operations (FFO) per share and free cash flow (FCF) per share are calculated using the weighted average number of common shares outstanding during the period. Refer to the "Non-IFRS and Supplementary Financial Measures" section of this news release for more information regarding these non-‍IFRS measures and ratios.4. Represents a supplementary financial measure and is calculated as Cash flow from operating activities for the period divided by the weighted average number of common shares outstanding during the period.5. During the first quarter of 2025, our Adjusted EBITDA composition was amended to exclude the impact of realized gain (loss) on closed exchange positions and Australian interest income. Therefore, the Company has applied this composition to all previously reported periods. Refer to the "Non-IFRS and Supplementary Financial Measures" section of this news release. Key Business Developments Memorandum of Understanding for Data Centre Development at Keephills Site SignedOn Feb. 26, 2026, the Company entered into a Memorandum of Understanding (MOU) with Canada Pension Plan Investments and Brookfield to advance data centre development in Alberta, for which TransAlta is the exclusive site and power provider. The MOU establishes a framework for phased development at the Company's Keephills site in Parkland County, including an initial long-term power purchase agreement for approximately 230 MW and the evaluation of additional phases aggregating up to 1 Gigawatt of load. Development is subject to regulatory approvals and the parties reaching definitive agreements. Declared Increase in Common Share DividendThe Company’s Board has approved a $0.02 annualized (eight per cent) increase to the common share dividend and declared a dividend of $0.07 per common share on Feb. 25, 2026 to be payable on July 1, 2026 to shareholders of record at the close of business on June 1, 2026. The quarterly dividend of $0.07 per common share represents an annualized dividend of $0.28 per common share. Acquisition of Far NorthOn Feb. 2, 2026, the Company closed the acquisition of Far North Power Corporation (Far North) for a purchase price of $95 million from an affiliate of Hut 8 Corporation, subject to working capital and other adjustments. The net cash payment for the transaction was funded through a combination of cash on hand and borrowings under TransAlta's credit facilities. The transaction adds 310 MW of capacity from four natural gas-fired facilities in our core market of Ontario, increasing the Company's total installed capacity in the province to 1,384 MW. US$400 million Senior Notes Offering and Early Redemption of the 7.8% Senior NotesOn Dec. 22, 2025, the Company issued US$400 million senior notes with a fixed annual coupon rate of 5.9 per cent, maturing on Feb. 1, 2034. The notes are unsecured and rank equally in right of payment with all existing and future senior indebtedness and senior in right of payment to all future subordinated indebtedness. The notes were issued at 99.39 per cent of par value, resulting in net proceeds of $541 million (US$393 million), and are callable in three years. Interest payments on the notes are made semi-annually, on Feb. 1 and Aug. 1, with the first payment scheduled for Aug. 1, 2026. The proceeds from the offering were used to redeem all of the Company's outstanding 7.8 per cent US$400 million senior notes for the total redemption price of $573 million (US$416 million) in advance of the scheduled maturity date of Nov. 15, 2029. Mothballing of Sheerness Unit 1On Dec. 18, 2025, the Company provided notice to the Alberta Electric System Operator (AESO) that Sheerness Unit 1 will be mothballed effective April 1, 2026, for a period of up to two years. The Company maintains the flexibility to return the mothballed unit to service when market fundamentals improve or contracting opportunities are secured. The unit will remain available and fully operational through the first quarter of 2026 and Sheerness Unit 2 will remain fully in service. Centralia Unit 2 Mandated to Remain AvailableOn Dec. 16, 2025, the Company received an order from the United States Department of Energy (the Order) requiring that our 700 MW Centralia Unit 2 facility remain available if called upon to operate for a period of 90 days, until March 16, 2026. The Company is currently compliant with the Order and continues to work with the state and federal governments in relation thereto. Centralia Tolling Agreement SignedOn Dec. 9, 2025, the Company announced it had entered into a long-term tolling agreement (Tolling Agreement) with Puget Sound Energy to convert our 700 MW Centralia Unit 2 facility from coal to natural gas. The conversion extends the operating life of facility and will leverage existing turbines, transmission and infrastructure, while also lowering emissions. The Tolling Agreement provides a fixed-price capacity payment through 2044 for the facility. The coal-to-gas conversion project is expected to require approximately US$600 million in capital and, once in service, will generate contracted cash flow over the life of the Tolling Agreement. The Company expects to declare a final investment decision for the project in early 2027, after receiving required regulatory approvals. Permitting work will continue through 2026, followed by construction in 2027–2028, with converted natural gas-fired operations expected to begin in late 2028. Chief Executive Officer Succession On Nov. 6, 2025, the Company announced that John Kousinioris, President and Chief Executive Officer and a Director of TransAlta, plans to retire effective April 30, 2026. Concurrent with this announcement, the Board of Directors appointed Joel Hunter, TransAlta’s Executive Vice President, Finance and Chief Financial Officer, to succeed Mr. Kousinioris as President and Chief Executive Officer and be nominated to join the Board effective April 30, 2026. Mr. Kousinioris has agreed to serve as a strategic advisor to Mr. Hunter and the Board for a period of six months following his retirement. The Company’s Chief Financial Officer successor will be announced in the coming months. Demand Transmission Service Contract On Oct. 3, 2025, the Company entered into a 230 MW Demand Transmission Service Contract with the AESO, representing the full allocation awarded to the Company through Phase I of the AESO's Data Centre Large Load Integration Program. 2026 Outlook For 2026, the Company expects Adjusted EBITDA to be in the range of $950 million to $1,050 million and FCF to be in the range of $350 million to $450 million, based on the following expectations: Lower contribution from the Energy Transition segment due to the Centralia facility ceasing dispatchable coal-fired generation at the end of 2025;Lower contribution from the Alberta merchant gas portfolio as a result of lower average hedge prices and higher fuel costs, partially offset by lower carbon compliance costs due to a higher utilization of internally generated low-cost environmental credits;Lower contributions from Sarnia, reflecting a step down in contracted pricing and the expiry of the contract and decommissioning of the Ada Cogeneration facility;Higher contributions within the Hydro, Gas and Wind and Solar segments due to the expected realization of carbon credits against in-year, in addition to 2025, carbon compliance costs in Alberta;Higher contributions from the Gas segment due to the acquisition of the Far North Ontario gas facilities;Higher contributions from the Wind and Solar segment as a result of higher expected production;Higher income tax expense; andLower Net Interest Expense as a result of lower interest rates on refinanced debt and lower interest on non-recourse debt as a result of amortizing repayments. The following table outlines our expectations on key financial targets and related assumptions for 2026 and should be read in conjunction with the narrative discussion that follows and the "Risk Management" section of TransAlta's MD&A for the Fourth Quarter and Year Ended Dec. 31, 2025: These are non-IFRS measures and ratios, which are not defined and have no standardized meaning under IFRS and may not be comparable to similar measures presented by other issuers. We believe that presenting these items from period to period provides management and investors with the ability to evaluate (loss) earnings and cash flow trends more readily in comparison with prior periods’ results. Please refer to the Non-IFRS and supplementary financial measures section of this news release for further discussion of these items.Represents forward-looking information.See “Cautionary Statement Regarding Forward-Looking Information” herein.The actual 2025 amounts for the most directly comparable IFRS measures for Adjusted EBITDA and FCF were as follows: Loss before income taxes of $141 million and Cash flow from operating activities of $646 million. The most directly comparable IFRS ratio to FCF per share is cash flow from operating activities per share of $2.18, which is calculated as cash flow from operating activities for the period divided by the weighted average number of common shares outstanding during the period. Refer to the "Non-IFRS and Supplementary Financial Measures" section of this news release for further discussion of these items. The Company's outlook for 2026 may be impacted by a number of factors as detailed further below: Alberta spot price sensitivity: a +/- $1 per MWh change in spot price is expected to have a +/- $2 million impact on Adjusted EBITDA for 2026. Energy Marketing Adjusted Revenues and Net Interest Expense are non-IFRS measures, are not defined, have no standardized meaning under IFRS and may not be comparable to similar measures presented by other issuers. The most directly comparable IFRS measure to Energy Marketing Adjusted Revenues is revenues of $130 million for the year ended Dec. 31, 2025 and to Net Interest Expense — interest expense of $347 million for the year ended Dec. 31, 2025 Conference call and webcast TransAlta will host a conference call and webcast at 9:00 a.m. MST (11:00 a.m. EST) today, Feb. 27, 2026, to discuss our fourth quarter and full year 2025 results along with the Company’s 2026 annual guidance. The call will begin with comments from John Kousinioris, President and Chief Executive Officer, and Joel Hunter, EVP Finance and Chief Financial Officer, followed by a question-and-answer period. Fourth Quarter and Full Year 2025 Results Conference Call Webcast link: https://edge.media-server.com/mmc/p/whytyzbs To access the conference call via telephone, please register ahead of time using the call link here: https://register-conf.media-server.com/register/BIaa8023bbcae44cde8d2a046c730467b3. Once registered, participants will have the option of 1) dialing into the call from their phone (via a personalized PIN); or 2) clicking the “Call Me” option to receive an automated call directly to their phone. If you are unable to participate in the call, the replay will be accessible at https://edge.media-server.com/mmc/p/whytyzbs. A transcript of the broadcast will be posted on TransAlta’s website once it becomes available. TransAlta is in the process of filing its Annual Information Form, audited Consolidated Financial Statements and accompanying notes, as well as the associated Management’s Discussion & Analysis (MD&A). These documents will be available today on the Investors section of TransAlta’s website at www.transalta.com or through SEDAR+ at www.sedarplus.ca and with the U.S. Securities and Exchange Commission on EDGAR at www.sec.gov.... Read more

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