Altius Renewable Royalties Q4 2023 Earnings Call Transcript

Quartr
Provided by Quartr
March 7, 2024

There are 10 speakers on the call.

Operator

Good morning, ladies and gentlemen, and welcome to the Altius Renewable Royalties Q4 and Year End 2023 Financial Results Conference Call. At this time, all lines are in a listen only mode. Following the presentation, we will conduct a question and answer session. This call is being recorded on Thursday, March 7, 2024. I would now like to turn the conference over to Flora Wood, Investor Relations.

Operator

Please go ahead.

Speaker 1

Thank you, Joanna. Good morning, everyone, and welcome to our Q4 year end 2023 call and webcast. Our press releases our press release and filings were released yesterday after the close, including the annuals and the AIF and are available on our website under Investors. This event is being webcast live, and you'll be able to access a replay of the call along with the presentation slides that have also been added to the website on the homepage and under Investors. Brian Dalton, CEO of ARR and Frank Gettman, CEO of Great Bay Renewables, will both be speakers on the call.

Speaker 1

And in the Q and A, we also have Ben Lewis, CFO of ARR, available for questions. The forward looking statement on Slide 2 applies to everything we say in our formal remarks and during the Q and A. And with that, I'll turn over to Brian for his opening remarks.

Speaker 2

You, Flora, and thank you everyone for joining us today. We've just passed the 3 year anniversary of becoming a publicly traded company. To describe this period within the renewable sector as dynamic would certainly be an understatement. To put things in context, the TSX Renewable Index has fallen to around a third of the levels it was when we were marketing the IPO, which gives an indication of how access to and the cost of equity capital has changed for the renewable sector, while at the same time, the debt cost of capital has also increased dramatically. Over this 3 year period, we have seen market based power prices, largely following the price of natural gas, jumped to heady levels early on before declining the current base levels that are unsustainably low when factoring for long term industry investment requirements.

Speaker 2

This has been offset, however, by the steady march upwards of contracted power prices that are being settled with large industrial customers for access to renewable sources of power. All of this is to say that our royalty finance product offering must be tailored in real time, almost on a monthly basis in fact, as we strive to earn our place and servicing the needs of our sector. Please don't mistake any of this for wine. It is during tough dynamic times that the royalty financing model shines and outcompetes, especially when it is applied using a long term contrarian mindset. It is also when most it is most appreciated by those operating level businesses who avail of it or in other words, when it can really earn an embedded place in the broader sector financing landscape.

Speaker 2

I understand that for anyone focused on short term measures, this backdrop of conditions can feel very challenging and too hard. But for those of you who think longer term, I feel very strongly about delivering the message that these are indeed the best of times on the ground for what we do. Your entire team understands this and are working tremendously hard right now to make the most of this opportunity to grow and diversify our business and to position us for long term success and value creation. And with that, let me turn it over to Frank to give you some color on the past year and what is before us. It's her turn, Frank.

Speaker 3

Thank you, Brian. Okay, great. Thank you. Thank you, Brian. Good morning.

Speaker 3

I'm excited to share with you today an update on our continued progress in building our broad diversified portfolio for Global Royalties. Our royalty portfolio revenue and cash flow continues to grow with GVR joint venture level royalty revenue for the full year of 2023 coming in at $10,500,000 compared to $7,300,000 in 2022, an increase of 44%. Operating cash flow at GBR was $5,100,000 for 2023 compared to $2,700,000 for 2022, an increase of 89%. For 2024, we're providing revenue guidance today of $13,000,000 to $16,000,000 based upon our current royalty portfolio, including construction stage projects on which GVR has royalties that are expected to reach commercial operation in 2024 and current merchant power price assumptions. The midpoint of guidance of $14,500,000 represents a 38% increase over GVR's revenues in 2023.

Speaker 3

These figures include expected late year revenues from our recently announced Angelo Solar Investment, but do not include revenue from any additional potential investments during the year or revenue from potential project sales by developers Hexagon Energy or Hodgson Energy, where GVR has the option of receiving a portion of the sale proceeds. As you know, in Q4 last year, we announced the closing of a $247,000,000 credit facility for Great Bay. This financing provides significant liquidity to continue to grow the business at an attractive cost of capital with no dilution to shareholders. We are pleased to be able to deploy some of this liquidity with our recently announced $30,000,000 investment with Apex and its 195 Megawatt Angelo Solar project, an attractive project with a strong long term offtake contract. Angelo is projected to achieve commercial operations in Q2 and provide GVR with new royalty revenue starting in Q4 of approximately $4,700,000 per year for the 1st 5 years before moderating to lower levels for the remaining project life, including any repowering or extensions.

Speaker 3

A key benefit of this structure is that it provides higher near term revenue, while the revenue ramp from our development stage royalties over the next several years continues to progress. I'd like to make a few comments on the macro landscape for renewables. Some of the headwinds we previously discussed in the renewables industry are ongoing, namely higher interest rates and costs of both debt and equity capital, interconnection queue backlogs and delays, higher interconnection costs, supply chain constraints that have shifted from solar panels to transformers and switchgear and political uncertainty. While these headwinds caused project delays and higher costs for developers and sponsors, it creates a backdrop that increases the demand for innovative sources of capital such as GVR's royalty financing. We're also seeing continued load growth and demand for renewable energy from new data centers to support AI, onshoring of U.

Speaker 3

S. Manufacturing capacity and generally strong economic activity, particularly in Texas. Who knows how long these market conditions will last, but it's a good time for Great Bay to deploy. We've grown our team to 8 to try to help us capture this opportunity. We're also trying to determine what the market will bear when it comes to our expected returns for both developer deals and operating projects and are seeking to achieve the higher end of our previously stated 8% to 12% return threshold range given the current environment.

Speaker 3

I would also note that this range does not factor in any long term option value inherent in the royalty financing model that we have spoken about at length in the past. In sum, Great Bay remains well positioned with almost 2.5 gigawatts of operating royalties, 8 95 Megawatts of projects with GVR royalties in construction, almost 20 gigawatts of wind, solar and storage development projects in our developer portfolio and a strong pipeline of new business opportunities. Finally, I'd like to recognize the tremendous efforts of the entire team at Great Bay. We are a small but mighty team doing great work to deliver long term value to our shareholders. We look forward to reporting on our progress throughout the rest of 2024.

Speaker 3

That's it for my update. I'll turn it back to you, Brent.

Speaker 2

Thanks, Frank. So I guess to pass, I'll give it back to you to start up on questions.

Speaker 1

Joanna, we're ready for questions now.

Operator

Thank you. Ladies and gentlemen, we will now begin the question and answer session. First question comes from Rupert Merer from National Bank Financial. Please go ahead.

Speaker 4

Hi, good morning everyone. Good morning, Rupert. So looking at the investment landscape, I think you invested $36,000,000 last year at GBR. You're off to a quick start this year. You've announced the $30,000,000 commitment, and I think you have another $23,000,000 at your development partners.

Speaker 4

But you've got a lot more liquidity than that. So do you have any goals for capital deployment this year or any forecasts that you can leave with us?

Speaker 3

We have internal goals. I'm not sure we're ready to share that with the market right now. It's a little bit we're opportunistic in that it takes 2 parties to be able to close the transaction. We have numerous conversations ongoing, both at the developer stage, but I think excitingly, a lot of them are at the operating stage royalties as well. So I just we're glad we had that liquidity, but we're confident that we'll be able to deploy that over time.

Speaker 2

Rupert, I might add as well that if there's any hint that we're trying to make that liquidity stretch out, I don't think that's the case. We see the current markets as being quite opportune and representing a window in time. So obviously to the extent that quality deals can be sourced, we'd want to take advantage of this market window as much as we possibly can. But again, it's just it's opportunity driven and deals got to close. So we're trying to do as much as we can.

Speaker 2

It's probably the right answer.

Speaker 3

Brian has made it clear to me, don't worry about spending all the money.

Speaker 4

Very good. No, it seems like a lot of the opportunities are in Texas. Can you comment on the attractiveness of Texas versus other markets? And do you feel the need to diversify a little bit away from Texas at this point given your exposure there?

Speaker 3

Well, I guess two things. First on the diversification, there's a lot of non ERCOT projects in our developer pipeline. So we're going to naturally diversify over time. And that's in PJM, we have a number of projects in MISO and other areas of the country. So that's going to happen naturally because that's but the reason that you're seeing more activity in Texas is because their interconnection process isn't bollocks up the way the rest of the country is.

Speaker 3

So actually that's one of the few areas where projects are still moving forward and things are getting done. So I think that's what you're seeing. And then finally, there's just tremendous like I can't overstate the load growth in Texas. It's unlike anything you really have seen in my entire career in the electric power industry where you've seen usually talking 1%, 2%, 3% growth, we're talking 6%, 7%, 8% load growth in some areas of Texas. It's just incredible.

Speaker 3

And it's interestingly not just everybody from California moving to Texas. It's also manufacturing. It's getting back to smokestack, solid core manufacturing demand, but a lot of that now has a much higher electrical component to it. So whether it be the data centers or the Bitcoin mining. So it's just a really if there wasn't a load growth to go with it, I might be concerned, but there's tremendous load growth in ERCOT.

Speaker 4

And when you look at that market and your forecasts for this year in Texas, how much are you impacted by curtailments? And how do you see that playing out in the near and medium term? I know we're seeing a lot of storage go into that market, but also a lot more generation too.

Speaker 3

Yes. No, it's a great question. We factor that in. We have we do that analysis upfront when we make the investment. So we factor in if it's a particular area that there's a curtailment, we'll just factor that into our price forecast assumptions.

Speaker 3

So that in some ways, I don't mind investing in a constrained area. If there's visibility, and over time, it's going to become unconstrained because the assumptions that we're using at the time we're making investment are lower for power prices. So you have some kind of built in relief valve when storage is built or new transmission is built. So we try to be smart on that upfront and it's become a really important factor in our due diligence.

Speaker 4

Great. Thanks for the color. I'll get back in the queue.

Speaker 3

Yes.

Operator

Thank you. Next question comes from Nick Boycek from Cormark. Please go ahead.

Speaker 5

Thanks. Good morning, guys. Hi, Nick. Coming back to Rupert's question on kind of the expectations for the year, I'm just curious if you can expand maybe a little bit more on the types of opportunities you're looking for. You've got a couple of operating royalties under your belt now, different modalities, different regions.

Speaker 5

If there was a perfect opportunity to come up, what would the characteristics be, maybe size, technology type, contract versus merchant? Like just walk us through what the perfect opportunity would be?

Speaker 3

Yes. I don't know I don't mean to be flip, but it really is there is no perfect opportunity. We're kind of out sourcing these deals. But I will tell you what we're seeing is that there's a lot of folks who are in this transition and trying to own more projects from being a buy and flip developer to being an IPP, similar to what Apex is doing and there's others doing it in the market. And what they're running up against is that it's costing them because of delays and the increasing cost of the equipment, it's cost and higher cost of debt.

Speaker 3

It's costing way more than people had forecast. So they're looking to stretch their equity dollars. You see a lot of people in the market, you see it everywhere with these asset sell downs or that's happening industry wide. But we're a great alternative to if you want to sell down a minority position in an operating project, don't sell down a minority position. Maintain 100% control and take a royalty from Great Bay.

Speaker 3

And because we're passive, we're not equity, you'd be able to maintain your ownership. So we're seeing opportunities like that. And then also just people looking to extend their project equity dollars across multiple projects because it's just the amount of capital required to build up these projects is enormous. So I think that's a we're seeing a lot of that opportunity. There is tremendous demand for early stage development capital.

Speaker 3

We're being a little I would say we're being very selective in new developer opportunities because of the delays. If someone is in an early stage developer day, even if they're a great team, their projects are probably going to be looking at 2,030 or beyond. And that's changed dramatically from when we made our investments into our developer partners. So if someone one thing we're looking at potentially is DG because a DG developer because those are not slowed down by the interconnection delays. We're still able to get those projects online and operating.

Speaker 3

So there seems to be a good flow of construction going on in those projects. So that might be something we're looking at. So don't know if that's just to give you a flavor of what the kind of opportunities we're seeing.

Speaker 2

Nick, I'd probably add the other component of that landscape that we probably are seeing some shift in is just counterparty quality. The type of player that is starting to see our financing as attractive can certainly expanded a little bit, maybe just with changing conditions, maybe it's a function of adoption. But in these difficult times, it's probably not unusual. It's the strong groups that are weathering at best and seeing opportunities for consolidation and all kinds of things. So that's been one really positive feature we've certainly been seeing like the quality or the strength of the counterparty that is engaging with us is on average certainly going off.

Speaker 3

Folks, I've been taking my call a couple of years ago or not taking our call. Sorry, actually calling you. How's that royalty thing working again?

Speaker 5

Okay. So on that dynamic there then, does that suggest that you're maybe seeing more opportunities that might be larger in scale for the operating deals? Or is the kind of $30,000,000 deployment like what we just saw with Angelo Solar kind of like that sweet spot where one of these larger developers could monetize a sell down, but not give up too much of the economics?

Speaker 3

Right. I think it's I think that $30,000,000 to $50,000,000 for a single operating project is probably the range we're looking at. But there are folks out there who are looking to

Speaker 5

recycling assets is

Speaker 3

the big buzzword. It just means like sell stuff because I need money to grow. Well, if they have a portfolio, right, that's one of

Speaker 2

the things we're looking at,

Speaker 3

is there someone with multiple projects? Is there a portfolio structure we can put in place where we do it across multiple projects? That would be a bigger check, but we haven't been able to complete one of those yet.

Speaker 2

Yes. So Frank, I think that's exactly right in that. There's a maximum really amount of royalty exposure that fits well in a structure. So it's kind of a function of the size of the individual projects. It's important for them,

Speaker 6

it's important for us

Speaker 2

as well not to have too much of the economics of the project because in the long haul that can impair motivation for longer term option realization, the repowerings and those kinds of things. So there's a certain level you want to stay within.

Speaker 3

If I could just add on a follow-up on that, Brian, that's also one of the reasons why we structure our direct single project operating royalties with a higher front end royalty that steps down over time. It has the benefit of both providing near term cash flow and revenue, but it also gets us down to a lower percentage in later years, sort of less of a burden that Brian talking about, so that we don't impact their decision to spend money on CapEx and the like. So there's a couple just having a higher royalty rate isn't always a good thing. There's a bit of art, not a science to this.

Speaker 5

Got it. That makes sense. And then just last one here, Clint, to the other side of the barbell approach. In the guidance comments, you kind of mentioned that you could potentially expect to receive project sales from Hexagon or Hodson. Are you seeing anything with those 2 partners that suggested they could be monetizing some projects near term?

Speaker 5

And if so, would you want to monetize that value instead of taking royalty? And if so, why would you prefer that?

Speaker 3

The answer is yes. They're both moving forward with project sales and looking to continue to advance their portfolios. We still get a royalty. Maybe that was confusing in what we said there. We still get a royalty on the project that's sold.

Speaker 3

It's just we it was basically risk mitigation, we said. But if for some reason there was such delays that we didn't feel confident that the rest of the program was going to get us our royalties. We wanted the cash flow upfront. We have the right, but not the obligation to take a share of the sale proceeds, but we still get our royalty, just to be clear. The reason that we would do that, and I think we probably will, because we also have an option with both Hexagon and Howletton to deploy additional capital to basically have a put to put more capital into them in the future if we want to.

Speaker 3

So to us, it seems to would seem to make sense to take the cash now on the early project sales and continue to deploy it online if you have better visibility. That seems like a prudent thing. So we haven't made any final decisions yet, but just to be clear, we still get a royalty on. It's not in lieu of a royalty.

Speaker 2

Yes. And we're essentially financing primarily with debt right now. So adding something from the other side of the ledger along the way is just prudent. Okay, got it. Thank you.

Operator

Thank you. Next question comes from Jonathan Lamers at Laurentian Bank Securities. Please go ahead.

Speaker 7

Good morning. Thanks for taking my questions. On the Angelo investment, just to circle up, there were a number of positives from that, including a high level of near term cash flow and with the operations starting in May and you're getting first royalty payments in October. I guess, first of all, as you put the debt financing to work, is near term cash flow something you're focused on for the next round of investments?

Speaker 3

I think that's where the greatest risk reward opportunity for us is today. We would have loved to invest in operating cash flowing projects back when we started the company 3 years ago. But the fact was that the returns we got were not that attractive. That dynamic has changed. So it seems to us it makes a lot of sense that we can deploy into operating cash flowing assets at healthy returns that provide immediate revenue.

Speaker 3

That's and it has the additional benefit And I referenced this in my comments that it's providing near term revenue until we hit this wedge of developer royalties, which we have coming in the next couple of years. And we have we see these things that it's happening. There's a big wedge of royalties coming at us. Well, we can fill the near term with near term cash flow. It's a nice bridge to that longer term revenue.

Speaker 3

So I guess that's how we're thinking about it.

Speaker 7

And it was nice to see as well the demonstration of the continuing relationship with Apex. There was some discussion earlier about seeing high quality counterparties coming to the table. Do you foresee continued opportunities with partners like the Apexes and TGEs of the world that might have been acquired since you started working with them?

Speaker 3

Well, our number we have our goals for the year we set with the Board every year and our number one goal every year since we started the company has to be a great partner Because that's something that Brian taught me early on that long term, you're in these projects for a long time, you want to be a great partner. And if you are a good partner, they oftentimes see follow on investment opportunities. And while we didn't want to get bought out of our original investment with Apex, Ares came in, they saw that's what they wanted to do. But things have changed, markets change, we maintain that relationship and we were able to get this additional piece of business done. So you never want to burn any bridges and we are really focused on being a good partner.

Speaker 3

So I would say, hopefully, yes, that's our goal is to continue to do repeat business and ongoing business with good strong counterparties who we have good relationships with.

Speaker 7

Okay, thanks. And one interesting thing in the call slides was on the development pipeline. The number of gigawatts you're showing now for Nova Energy and Hexagon moved up from the last slide. I know Nova has a big portfolio of projects and your contracts, I believe, are for royalties on a portion of those. I guess, has there been any change in the development pipelines for those 2 that you're trying to highlight there?

Speaker 7

Or are you just kind of We're not highlighting it.

Speaker 3

Yes, it's just a fact. They're doing their job. They're growing their pipeline. They're seeing opportunities and it's in part a direct response to our capital. And this is the same thing that happened with TGE.

Speaker 3

When we first invested in TGE, I think they had like 1.4 gigawatts or something out there, but now they have almost 6 gigawatts. Well, a lot of that, it was a direct result of our capital. And our program works that all of that goes into the pot. So, we likely hopefully, we don't get royalties on every single one of those. That means there's been long delays or unless we deploy additional capital, which is also what we did with TTE.

Speaker 3

So, the fact that they're building that collateral base for us is nothing but a positive. And I've been incredibly impressed with Nova and Watson go from a true startup when we first invested to now they have approximately 5 gigawatts of projects across the country. It's just they are a very, very professional team. They've done this before. Declan is a leader in the industry and then there's a reason why.

Speaker 7

Okay, thanks. And just on the just accounting question, I guess, just your share of the losses at the joint venture, we start to see the royalty revenues flowing there. Do you expect that to sort of trend at about this rate until 2026 when we start to see more of the projects in operation?

Speaker 3

I'll let Ben handle the specific question about the county, but they're being very conservative in that they expense everything. They're expensing a lot of the upfront costs and that just goes through to us. So it's just a function of how they're accounting for this development activities. But then I don't know if you have any Yes.

Speaker 6

I think you're asking about Nova and they thus far they've expensed pretty well every dollar that they've incurred. So what you'll see on our books, I think it's we'll recognize losses and we have recognized losses while they're in this stage and when their projects get further along and they either sell them or start building them that trend over the course and we'll go in the other direction. So we don't have any concerns there.

Speaker 7

Okay. Thanks for your comments.

Operator

Thank you. Next question comes from Devin Schilling at PI Financial. Please go ahead.

Speaker 7

Hi, good morning.

Speaker 8

Just on your 2024 guidance range, does this include the pending escrow payment from Titan Solar? And I guess, also what are the remaining steps here for the payment to be released from this project?

Speaker 3

Yes, it does. And if we haven't already received it, I think we'll be receiving it shortly. So it does include that. And the work's been done. It's just a process of tax equity standing off to release the escrow.

Speaker 3

It's not there's really no risk to those revenues.

Speaker 8

Okay. Okay. No, that's good to know. And then I guess just secondly here, I see the Canyon Wind royalty addition in the MD and A here. I think this was not fully expected on my end.

Speaker 8

I guess any details you can share on this and what's the possibility for some

Speaker 7

of these other royalties to jump forward in the queue?

Speaker 3

I think Canyon is a NxThera project. NxThera plays their construction activities very close to the vest and that's the prerogative and we're not going to they're a big player in the market. They're going to disclose to us what they want to disclose when they want to disclose it, and we respect that. And but they are also probably the best counterparty in the entire industry at building projects and getting them done in a timely fashion on time and on budget. So they're very, very have a very, very strong machine in building out these projects, but they keep the information close to their vest and that was a nice day out project.

Speaker 8

Okay, great. Well, regardless, it was great to see here. That's everything from me. Thanks, guys.

Operator

Thank The next question comes from John Mould at TD Securities. Please go ahead.

Speaker 9

Hey, good morning, everybody. I'd like to maybe just start with Enbridge and they held their Investor Day yesterday and several TGE projects showed up in their materials as later mid stage development projects. I'm just wondering any takeaways you might have from their update yesterday. And can you just maybe speak more broadly to Enbridge's sponsorship of TG and the impact that that's had on the progress of the pipeline versus maybe what you would have anticipated otherwise?

Speaker 3

Sure. I did not participate or attend or listen in on that yesterday, so I don't know the specifics of what you're talking about. But I know we have our quarterly calls. We've gotten in very constant communication with Tri Global World, it's not Enbridge. And it's been unbelievable to watch the commitment Enbridge.

Speaker 3

I don't know if they talked about the 100 and 100 of 1,000,000 of dollars. I think it's approaching $1,000,000,000 that they've invested into TGE and their projects for interconnection deposits, for panel orders, for I think they're going to go out looking to secure wind turbines. So I mean things that Tri Global could never have done on its own, Enbridge has stepped up and is providing their balance sheet and really providing an acceleration. If there are projects that are getting delayed, it's not because Enbridge is not doesn't want to go pedal to the metal. My guess is it's probably because of interconnection delays.

Speaker 2

Tom, I'd add, I think that we

Speaker 3

go ahead. No, go ahead, Ryan.

Speaker 2

No, I'd just add that it's really important to remember what happened when Inbridge bought TGE and effectively it was an effective sale of all of the projects in the pipeline. And that number looked and still looks well beyond what we would have originally obtained royalties on. So in essence, what happened is we gained an option on the entire portfolio at the time of the acquisition. And boy, I'm telling you that thing is starting to look pretty valuable right now.

Speaker 9

Fair enough. That's good context. And then maybe just on the Leeward owned projects. Can you maybe just provide

Speaker 3

a little color? How do those

Speaker 9

and maybe I'm not understanding it quite correctly, but how do those fit into the TG construction pipeline? They don't own them anymore. Are they still managing those? Or is it fully up to Leeward to move them forward? And I ask that recognizing that those are still a part of your broader royalty agreement.

Speaker 9

So if other projects move ahead, then they get superseded. So that's not a risk, but just wondering where those are fitting at this point?

Speaker 3

Yes. No, those are fully in control of Leeward now and Leeward is funding those, Enbridge. But we met recently, I met recently with the CEO and they are committed to those projects. I think a couple of them got fast track status in PJM, which they were very pleased about, which is fantastic for us and fantastic for them. So we've seen nothing to suggest they're not fully committed to those projects and to go forward and build them as quickly as they can.

Speaker 9

Okay, great. Those are all my other questions were answered. Thank you very much.

Operator

Thank you. Next question is a follow-up from Nick Boychak at Cormark. Please go ahead.

Speaker 5

Thanks. We haven't really touched on the smaller debt facility and the potential to deploy that into some of the inter connection queue issues. I'm just wondering, Frank, if you're starting to see a little bit more opportunity to deploy that capital and what that might mean for future opportunities?

Speaker 3

Yes. I think you're referring to the LC facility, the $23,000,000 LC facility. Yes, that is that may be the single biggest bottleneck in the entire industry right now. And to fully realize that potential, we do need a lot more than $23,000,000 But what we're working on now is there's the devil is in the details with how a third party Great Bay hosts on behalf of a developer with MISO or PJM or one of these RTOs and still maintains control of the capital so that if something happens, we want to pull it back to keep the risk free nature of that deposit. If we just give it directly to the counterparty and they put it in, we've lost control of it.

Speaker 3

So we've had to work and Zach has done a tremendous job digging into the details. And I think we're getting close to being able to complete our first one of those interconnection deposit support mechanisms. And it's a great use of that LC facility because we're paying a fee on it. So we definitely want to be able to deploy it to turn into a revenue generator than a cost or expense.

Speaker 2

Okay. Thank you.

Operator

Thank you. There appear to be no further questions. I will turn the call back over for closing comments.

Speaker 1

Thank you, Joanna. Oh, Brian, I'll let you speak. No, I don't go ahead.

Speaker 2

I'm sure we were going to say the same thing, but thank you.

Speaker 1

Well, interrupt me if we don't. But I just wanted to say that well, I want to thank everybody for joining and to say that, that was a really great set of questions from the analysts. And I'm looking forward to talking to you soon after Q1.

Operator

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and we ask that you please disconnect your lines.

Powered by Quartr

Key Takeaways

  • Altius describes the current market—where equity access and debt costs have both tightened—as the “best of times” for its royalty financing model, which it continually tailors in real time to meet sector needs.
  • Great Bay Renewables’ joint-venture royalties produced $10.5 million in revenue (up 44%) and $5.1 million in operating cash flow (up 89%) in 2023, and it guides 2024 revenue to $13 million–$16 million (midpoint +38%).
  • In Q4 2023, Great Bay closed a $247 million credit facility with no shareholder dilution, enabling a $30 million royalty investment in the 195 MW Angelo Solar project, which is expected to generate ~$4.7 million of annual royalties starting Q4 2024.
  • Despite headwinds—higher rates, interconnection delays and supply-chain constraints—Altius sees rising demand for its royalty product, targets the top end of its 8%–12% return range, and has grown its pipeline to 2.5 GW operating, 895 MW under construction and nearly 20 GW in development.
  • Management emphasizes repeat business with high-quality partners (e.g., Apex, Tri Global) and is focusing on operating cash-flowing assets to bridge near-term revenues while its development-stage royalties ramp up over the next several years.
AI Generated. May Contain Errors.
Earnings Conference Call
Altius Renewable Royalties Q4 2023
00:00 / 00:00