TransAlta's Q3 2024: A Quarter of Strength and Resilience

TransAlta Corporation (TSX: TA) (NYSE: TAC) has reported another quarter of strong financial performance, demonstrating the company's ability to navigate market challenges and maintain a robust financial position. The company's third-quarter 2024 results, announced on November 5, 2024, highlight TransAlta's proactive hedging strategy and effective asset management, which have contributed to exceptional operating performance and free cash flow generation.

**Proactive Hedging and Asset Management**

TransAlta's proactive hedging strategy has been instrumental in mitigating risks associated with Alberta spot power prices, weather conditions, and natural gas prices. The company's hedging strategy involves locking in power prices and securing natural gas supply contracts to protect against price volatility. Additionally, TransAlta has optimized its Alberta merchant portfolio and explored future economic opportunities to enhance grid reliability and support the energy transition in its core jurisdictions.


The company's hedging strategy, coupled with active management of its Alberta merchant portfolio, has enabled TransAlta to achieve remarkable results in the third quarter of 2024. Despite anticipated declines in Alberta spot power prices, milder weather, and low natural gas prices, TransAlta delivered strong free cash flow and exceptional operating performance.

**Financial Performance**

TransAlta's third-quarter 2024 financial highlights include:

* Adjusted EBITDA of $325 million, compared to $453 million for the same period in 2023
* Operational adjusted availability of 94.5%, compared to 91.9% for the same period in 2023
* Free Cash Flow (FCF) of $140 million or $0.47 per share, compared to $228 million or $0.87 per share for the same period in 2023
* Return of $114 million of capital to shareholders during the nine months ended Sept. 30, 2024, through the buyback of 11.8 million common shares constituting 76% of the Company's 2024 enhanced share repurchase program of up to $150 million


TransAlta's strong performance in Q3 2024 is a testament to its proactive approach to managing market conditions and optimizing its asset portfolio. The company's hedging strategy, combined with active management of the Alberta merchant portfolio, has resulted in exceptional operating performance and the return of capital to shareholders, tracking towards the upper end of its 2024 guidance.

**Mothballing of Sundance Unit 6**

TransAlta's temporary mothballing of Sundance Unit 6, effective April 1, 2025, for a period of up to two years, was a strategic decision driven by ample supply conditions for Alberta throughout 2025. This move allows the company to hold the unit in reserve while exploring future economic opportunities relating to new demand for electricity entering the province and enhancing grid reliability. The mothballing of Sundance Unit 6 did not significantly impact TransAlta's Q3 2024 financial results, as the unit remains available and fully operational for the upcoming winter season. However, this decision may have implications for future growth prospects, as the unit's temporary removal from service could reduce TransAlta's overall generation capacity and potentially affect its ability to meet increased demand or secure new contracts.

**Acquisition of Heartland Generation**

TransAlta has made significant progress in its acquisition of Heartland Generation, with the company actively engaged in commercial discussions with Energy Capital Partners to finalize the transaction. The acquisition aligns with TransAlta's long-term strategic goals, as it will add complementary assets to its portfolio and support the energy transition in its core jurisdictions. The company remains optimistic about obtaining regulatory approval from the Competition Bureau and is committed to enhancing shareholder returns through appropriate capital allocation, such as share buybacks and its quarterly dividend.

In conclusion, TransAlta's strong third-quarter 2024 results demonstrate the company's ability to navigate market challenges and maintain a robust financial position. The company's proactive hedging strategy, effective asset management, and strategic decision-making have contributed to exceptional operating performance and free cash flow generation. As TransAlta continues to explore future economic opportunities and pursue the acquisition of Heartland Generation, investors can expect the company to remain a strong performer in the energy sector.