Polaris Renewable Energy Q2 2026 Earnings Report

Polaris Renewable Energy EPS Results

• Actual EPS: -C$0.06
• Consensus EPS: N/A
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Polaris Renewable Energy Revenue Results

• Actual Revenue: $28.32 million
• Expected Revenue: N/A
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Polaris Renewable Energy Announcement Details

• Quarter: Q2 2026
• Date: 7/30/2026
• Time: Before Market Opens
• Conference Call Date: Thursday, July 30, 2026
• Conference Call Time: 10:00AM ET

Polaris Renewable Energy (TSE:PIF) is a Canadian publicly traded company engaged in the acquisition, development, and operation of renewable energy projects in Latin America & the Caribbean. We are a high-performing and financially sound contributor to the energy transition. The Company's operations include a geothermal plant (82 MW), four run-of river hydroelectric plants (39 MW), three solar (photovoltaic) projects (35 MW) and an onshore wind farm (26 MW).

Polaris Renewable Energy Q2 2026 Earnings Call Transcript

Key Takeaways

• Negative Sentiment: Production fell 7.7% year over year in Q2 and 6.4% year to date, reflecting Dominican Republic curtailment, Nicaragua’s geothermal decline and a return to more normal hydrological conditions in Peru and Ecuador.
• Negative Sentiment: Lower generation contributed to an 8% quarter-over-quarter revenue decline and an 11% decrease in adjusted EBITDA, while higher costs from integrating the Punta Lima wind farm and expanding the Mexico and Puerto Rico development pipeline also weighed on results.
• Negative Sentiment: Dominican Republic curtailment averaged 29% in Q2 and 35% year to date; management expects the issue to persist for roughly 18–24 months before grid-scale storage and transmission investments provide a more complete solution.
• Positive Sentiment: Polaris signed the contract for its Puerto Rico ASAP battery project, targeting mid-2027 commercial operation, and signed a Mexico joint venture agreement for 250 MW of solar with approximately 30% battery coverage under long-term U.S.-dollar contracts with CPI adjustments.
• Positive Sentiment: Management estimates the Mexico projects could generate approximately $25 million to $30 million of combined EBITDA, while the company maintains nearly $100 million of cash and plans to pay a quarterly dividend of $0.15 per share.

Presentation

[Operator]

Good day, everyone. Welcome to the Polaris Renewable Energy Incorporated Second Quarter 2026 Conference Call. At this time, all participants have been placed on a listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Chief Financial Officer, Alba Seisdedos, the floor is yours.

[Alba Seisdedos, CFO at Polaris Renewable Energy Incorporated]

Thank you, Kaylee. Good morning, everyone, and thank you for joining us for our 2026 Second Quarter Earnings Call for Polaris Renewable Energy Inc. Before we begin, we would like to remind you that in addition to our press releases issued earlier today, you can find our financial statements and MD&A on both SEDAR+ and our corporate website at polarisrei.com. Unless noted otherwise, all amounts referred to are denominated in U.S. dollars. We would also like to remind you that comments made during this call may include forward-looking statements within the meaning of applicable Canadian securities legislation regarding the future performance of Polaris Renewable Energy Inc. and its subsidiaries. These statements are current expectations, and as such, subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations.

[Alba Seisdedos, CFO at Polaris Renewable Energy Incorporated]

These risks and uncertainties include the factors discussed in the company's annual information form for the year ended December 31, 2025. On today's call, I will start with an overview of our second quarter and year-to-date operating and financial performance. Marc will discuss recent business developments and our growth initiatives before we open the line for questions. Beginning with production, overall, this was a quarter that generally developed as we expected from an operations perspective. During the quarter, consolidated generation was 7.7% lower than the exceptional second quarter of 2025, a result that was consistent with management's expectations. The quarter-to-quarter comparison primarily reflects continued curtailment in the Dominican Republic, lower geothermal production in line with the natural decline of the steam field in Nicaragua, and the return to more typical hydrological conditions in Peru and Ecuador after the unusually favorable water availability experienced last year.

[Alba Seisdedos, CFO at Polaris Renewable Energy Incorporated]

As we have noted previously, the second quarter of 2025 benefited from record hydroelectric production that was not expected to be repeated. The decrease in production was partially offset by stronger solar production in Panama. On a year-to-date basis, generation was 6.4% below the first half of 2025, reflecting the similar underlying factors. Looking at the portfolio in more detail, Nicaragua performed broadly as expected. The steam units continued to operate well, with levels of decline in line with expectations. During the six months ended June 30, 2026, production decreased compared to the same period in 2025, primarily due to the impact of the Q1 2026 planned biannual major maintenance of Unit 3, while no maintenance was performed in 2025, as well as due to lower performance of the binary plant, resulting from higher-than-anticipated sediment levels on the reinjection wells after the major maintenance. Peru delivered another solid quarter.

[Alba Seisdedos, CFO at Polaris Renewable Energy Incorporated]

Although production was below last year's record levels, generation remained above our internal expectations, despite the return to more hydrological conditions, to more normal, sorry, hydrological conditions. The Dominican Republic continued to experience curtailment. We experienced 29% for the quarter and 35% curtailment average year-to-date. Although curtailment improved during the quarter as compared to Q1 2026, where we saw the curtailment at 42% level. We continue working alongside the authorities and other renewable energy producers to support long-term solutions. The remainder of the portfolio performed generally as expected. Puerto Rico reflected lower wind resource during the quarter, while Panama continued to benefit from solid operating performance and favorable solar resource. Overall, production was lower than last year's exceptionally strong comparable period, but the portfolio performed broadly in line with our expectations, demonstrating the benefit of having a diversified mix of technologies and geographies.

[Alba Seisdedos, CFO at Polaris Renewable Energy Incorporated]

Turning to the financial results, the lower production translated into lower revenue, 8% decrease quarter-to-quarter and 5% year-over-year, and adjusted EBITDA down 11%, both quarter-to-quarter and year-over-year. However, the financial impact was partially offset by stronger pricing in Peru, driven by the annual CPI adjustment under our PPAs and favorable market conditions earlier in the year, together with improved pricing in Panama. Adjusted EBITDA for the six-month period was also impacted by higher direct costs, mainly related to the integration of our Punta Lima wind farm in Puerto Rico and the continued expansion of our development pipeline in Mexico and Puerto Rico. While these initiatives increase expense in the current period, they represent strategic investments intended to drive future earnings growth. From a balance sheet perspective, we remain in a very strong position.

[Alba Seisdedos, CFO at Polaris Renewable Energy Incorporated]

We entered the quarter with nearly $100 million of cash, providing ample flexibility to continue investing in growth while maintaining our disciplined capital allocation strategy. Finally, we remain committed to returning capital to shareholders. We have already announced that we will be paying a quarterly dividend on August 21 of $0.15 per share to shareholders of record on August 10. With that, I turn the call over to Marc.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

Thank you, Alba. I'll just start with a few additional operational comments. With respect to San Jacinto, as we had mentioned, I think last quarter, we have been running the binary unit about 0.75 MW lower than what we think we can, just due to some sediments in two of the key injection wells that arose after the major maintenance in Q1, and sort of getting a handle now in terms of what that may.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

Basically what the right level is to be running it. We will need to run it at the current levels, really what we saw in Q2 for the rest of the year. I do think we will be able to gain that back early next year through an acidification program, which we have done before, to clean out those sediments. We've done it several times. It's worked, the only issue is getting the somewhat specialized equipment. We will likely have to wait until Q1 to execute that. I do think we can gain back some of those, or about 0.75 MW on the binary unit, sometime early next year. In terms of the curtailment, it cost us about 5,000 MWh, which was a little bit lower than what we were budgeting.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

I would say overall, we're still targeting 40,000 MW-44,000 MW, 40,000 MW-42,000 MW actually, megawatts for the year, and we're running in line with that. We are seeing initiatives on the ground from the government that will address the situation. I think it's going to take 18 months to 24 months to fully address that situation through basically contracting large-scale, grid-scale storage as transmission assets. They are definitely doing that. I think it's call it 18 months to 24 months of curtailment. I think it should be a little bit less next year with just demand growth, but a more fulsome solution to that problem, call it a couple of years from now. In terms of the hydros, Alba did, I think, mention the most salient points. We definitely have heard comments or questions about El Niño.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

I would say that although we're not running at levels compared to last year, which was a high year, we are running more in line with levels from 2022, 2023, 2024, at least up till now. I think that we're, call it reasonably in line with the long-term average on the hydros, at least year to date. That price increase out of May 1 is a big one, which is on average, it was about 8% for the three plants in Peru. That's good. Overall, in Q1, we gave a range of 760 GWh to 770 GWh for the year. I still think about 760 GWh is doable for the year based on where we're at year to date. In terms of the growth, on the first one, the ASAP battery project in Puerto Rico, we did sign the contract with PREPA on June 12.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

We're now in finalizing the equipment process. We're hoping to have that finalized within the next 30 days. We're targeting a mid-2027 COD date. We very much look forward to the fact that we're moving from approval process into execution and construction phases. We will make sure to be providing updates as we move forward with this over the next 12 months. That's a big growth initiative for us. The next one that I'm going to talk about is Mexico, which we did announce. We had two announcements on that. Mexico is becoming a key growth market for us. We announced the fact that we were selected for 250 MW DC of solar plus 30% BESS coverage approximately. We signed the JV agreement on July 3, which sets out the key structure and governance for what they call the Mixto Project.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

We are now moving to finishing all of the contracting and development milestones. We do have commercial operation date estimates in the presentation that's on our website now. I would highlight that big highlights of the contracts is that it's going to be in U.S. dollars with U.S. CPI inflators and a reasonable tolling percentage. They'll be approximately 25-year contracts. We do try to highlight this in the presentation, but with the ASAP, which is a 100% tolling/capacity contract, no resource risk. It's a 20-year contract. With the Mexico at 25-year contracts, again, all USD, and there's a reasonable tolling percentage there. The actual extending the overall tenor of our contracts, but also I would say the quality of the contracts and the revenue profile is improving as well, as is the credit, the average, call it credit rating of the jurisdictions.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

We are also pursuing several other paths and projects in Mexico, we would expect clarity in, call it Q4 of this year at the latest, where we will know if those projects have been selected to move forward or not. That's coming relatively quickly. As we have mentioned before, we are also participating in several, call it more traditional RFP processes in several of our other markets, including Dominican Republic and Puerto Rico. Those, I would say, have similar timelines in terms of clarity on whether you're moving forward, whether you've been selected or not, all within, I would say, the next three months. In the next three months, we should have a line of sight on a significant amount of, call it further growth for us. That's coming, we think, relatively quickly.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

I would also mention lastly that we do outline these processes we're involved, which are linked to specific projects, but I would also highlight that we do quite frequently get approaches by local, I would say, developers that do not have the capacity to build a project, raise the capital for the project, and they're in all these markets. We do have what we think are options in addition to what is, call it, in our own pipeline. I would say that the strategy is let's push forward with our own. I think it's worth mentioning that if we are not able to secure those, I think our positioning in the market is such that does not mean we won't have other options in those key markets. I think that there's, call it, some insurance there that we will be able to significantly grow the pipeline.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

As you can see with these recent announcements, plus these other processes we're in, there's been a significant uptick in the total opportunities we're looking at, as well as the pacing of bringing them online, which has been a real focus for the company over the last 18 months. That's it for the formal comments, we can open it up for questions now.

[Operator]

Certainly. The floor is now open for questions. If you have any questions or comments, please press star one on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on a speakerphone to provide optimum sound quality. Please hold a few moments while we poll for any questions. Your first question is coming from Nicholas Boychuk with ATB Cormark Capital Markets, your line is live.

[Nicholas Boychuk, Analyst at ATB Cormark Capital Markets]

Perfect. Thanks. Morning, Marc?

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

Hi, Nick.

[Nicholas Boychuk, Analyst at ATB Cormark Capital Markets]

Hey. In Mexico, appreciate the color that you gave on the quality of the contracts, 10-year CPI inflators. As you're going through that, though, and starting to do all the other parts about CapEx and working with them on interconnection and whatnot, are you getting a sense of what the actual power price might look like and how that would compare to other markets that you're operating in? I'm just trying to contextualize what the 250 MW of solar could potentially generate in incremental cash flow, EBITDA pickup, et cetera.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

Yeah. I think I've seen some estimates in the sort of $25 million to $30 million EBITDA for those three. That's a total. That includes the energy and the tolling, right? That's a combined EBITDA number, which is very reasonable right now. I think both the CapEx and the EBITDA will go up somewhat from there once the final numbers are done. We already have some numbers that we've assumed, but I have a feeling that's probably going to go up. However, so will the revenue and EBITDA. I think for now, it's good to use that sort of $25 million to $30 million, and that you can sort of backwards imply what the returns are, and that kind of gives you exactly what the returns are that are being targeted and agreed upon.

[Nicholas Boychuk, Analyst at ATB Cormark Capital Markets]

Okay. Interesting. When you say it's going to go up, is that a function of the CapEx and then them responding and giving you a commensurate price because they recognize they have to do this in order to get all their auction filled?

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

I just think it's that the grid upgrade estimates were truly just that, and they have a tendency to, once you actually cost them out, they're going to be a bit higher. I would tell you, though, that that component of the contract is a pure tolling fee, though. In many ways it makes the overall picture better.

[Nicholas Boychuk, Analyst at ATB Cormark Capital Markets]

Makes sense.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

The CapEx for the battery is a tolling fee, which is great, and the CapEx for any grid upgrades are also tolling fees. To the extent that is higher than what we have right now, our actual percentage of revenue represented by tolling will go up.

[Nicholas Boychuk, Analyst at ATB Cormark Capital Markets]

Okay. That makes sense. When you are looking at this opportunity relative to Puerto Rico, because my understanding is in Puerto Rico, you are going to have to potentially use U.S. contractors or U.S. equipment and CapEx. Are you better off meaningfully in Mexico by using other vendors and other options? How should we be thinking about that mixture between the two?

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

Well, it is for sure more expensive on the islands, particularly Puerto Rico. Conversely, we think it is going to be, based on even conversations, it is going to for sure be cheaper in Mexico. Not necessarily the equipment provision, although even in Puerto Rico, because of tariffs, even the equipment is going to be a bit more expensive, but the big delta is more on the contracting side. We do think given the scale in Mexico, there is going to be a big difference on that side in terms of it is going to be much better.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

Nick, I do not have sort of off the top of my head what percent in Mexico balance of plant is the balance of plant number relative to what we would look at in Puerto Rico. I just do not have that number. Directionally, it will be a big difference. Which brings your energy.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

The energy price for the solar is going to be much lower. I would also say, though, that there needs to be an adjustment. Because there is a full U.S. CPI inflator in the Mexico, you are going to just start with a lower price than if you have sort of a fixed price in another market, right? It makes a big difference because if you assume sort of 2%, 2.5% inflation over a 25-year contract, your average price is quite different than if you assume, call it a fixed price, let us say, in Puerto Rico.

[Nicholas Boychuk, Analyst at ATB Cormark Capital Markets]

Yep, makes sense. Last for me, just as you're talking about these opportunities that are coming up in Mexico to potentially partner with other developers who can't develop projects that have already been awarded. Internally, just from a resource standpoint and your bandwidth to develop all of these simultaneously, how are you feeling about that? Any concerns about getting stretched too thin? Turning all these big projects online at the same time?

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

Yeah, it's a great question. It's something we are focused on. Up until, let's just say, a month ago, I felt that we could do two projects, two distinct projects with the team. Because we already do have people that are only project management on staff, and I think we can for sure do two of those. If you include the ASAP, call it we could do one solar project in Mexico without any new hires. We are for sure going to be hiring people in Mexico City. We do think that there's a lot of, call it people in that talent pool. The good news is we have a lot of what I would call corporate support in Managua. We have a big team there.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

That's more sort of support and services, and we also have, to a lesser extent, that kind of support in Toronto. We're going to have to hire, call it four or five people right out of the gate in, call it as a mini office in Mexico City. Which will likely be done before the end of this quarter. You're going to have project by project. We'll have sort of an execution team. I would say given that the first project, though, is Don Humberto, which we think will be ready to build, call it November. The two bigger ones are next year. That does give us some time, I would say, to sort of fill the roles and get the org chart nailed down.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

If those two big ones were sort of Q4 start of construction, that would be, I think, a bigger risk for us. In some ways, that does help us, right? That they're not going to be ready to build this year.

[Nicholas Boychuk, Analyst at ATB Cormark Capital Markets]

Okay. Appreciate the comment.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

To the extent we do more, I would say they're likely there's still going to be a staging in terms of when they're going to be ready to build. It won't be much later. It will be later. I would say that there's some execution risks, but there's also become some real benefits, too, in terms of having economies of scale, both on the equipment procurement side and the people side, the admin side. There's also, I think, real benefits to having scale there as well.

[Nicholas Boychuk, Analyst at ATB Cormark Capital Markets]

Does it imply that some of these larger ones, when they come online after, are going to be a little bit faster? Like if you start the first one, let's say, end of this year, call it a 12-month construction phase, and then you move to the next projects. Are they still about that 12-month-ish COD?

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

Yeah. I think maybe you can improve it. I wouldn't assume that. I think, I mean, in fact, what we have, Nick, is sort of more like an 18-month construction, and our experience has been to date that we've always done better than that. We're going to target better than that. I think to the extent we have more and we're doing more than maybe on average, you could get closer to 12month

[Nicholas Boychuk, Analyst at ATB Cormark Capital Markets]

Okay. Got it. Thanks, Marc.

[Operator]

There appear to be no further questions in queue at this time. This does conclude today's conference call. You may disconnect your phone lines at this time, and have a wonderful day. Thank you for your participation.

[Marc Murnaghan, CEO at Polaris Renewable Energy Incorporated]

Thank you.

[Alba Seisdedos, CFO at Polaris Renewable Energy Incorporated]

Thank you.

Participants

Executives

• Alba Seisdedos, CFO
• Marc Murnaghan, CEO

Analysts

• Nicholas Boychuk, Analyst at ATB Cormark Capital Markets