Polaris Infrastructure Stock

Good day, everyone. Welcome to the Polaris Renewable Energy Incorporated Second Quarter 2026 Conference Call. [Operator Instructions]

It is now my pleasure to turn the floor over to your host, CFO, Alba Seisdedos. The floor is yours.

Thank you, Kelly. 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, are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. 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, then Marc 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.

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 spin units continue to operate well with levels of decline in line with expectations. During the 6 months ended June 30, 2026, production decreased compared to the same period in 2025, primarily due to the impact of the Q1 2026 planned the annual 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, although production was below last year's record levels, generation remained above our internal expectations to speed 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.

So 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 6-month period was also impacted by higher credit 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 increased 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. We ended 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'll turn the call over to Marc.

Thank you, Alba. I'll 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 megawatts lower than what we think we can just due to some sediments in the injects 2 -- 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 -- basically what the right level is to be running it. We will need to run it at the current levels of really what we saw in Q2 for the rest of the year. But I do think we will be able to gain that back early next year through a certification program, which we have done before to clean up those sediments. We've done it several times, it's worked and the only issue is getting the -- somewhat specialized equipment. So we will likely have to wait until Q1 to execute that. But I do think we can gain back some of those are about 0.75 megawatts on sometime early next year.

And in terms of the curtailment, it was -- it cost us about 5,000 megawatt hours, which was a little bit lower than what we were budgeting. I would say, overall, we're still targeting 40,000 to 44,000 -- 40,000 to 42,000 actually megawatts for the year, and we're running in line with that. And we are seeing initiatives on the ground from the government that will address the situation. I think it's going to take 18 to 24 months to fully address that situation through basically contracting large-scale, grid scale storage as transmission assets. So they are definitely doing that. And so, I think it's, call it, 18, 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, I did, I think, mentioned the most salient points. We definitely have heard comments or questions about El Nino. 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 '22, '23, '24, at least up until now. So I think that we're, call it, reasonably in line with the long-term average on the hydros at least year-to-date. And that price increase as one is a big one, which is on average, it was about 8% for the 3 plants in Peru. So that's good.

And then overall, in Q1, we gave a range of 760 to 770 gigawatt hours for the year. I still think about 760 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 a contract with PREPA on June 12, and we're now finalizing the equipment process. We're hoping to have that finalized within the next 30 days. And we're targeting a mid-2027 COD date. And we very much look forward to the fact that we're moving from approval process into execution and construction phases, and we will make sure to be providing updates as we move forward with this over the next 12 months. So 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 2 announcements on that. Mexico is becoming a key growth market for us. So we announced the -- in fact that we were selected for 250 megawatt DC of solar plus the 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 mix projects. And we are now in 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

And I would highlight that big highlights of the contracts is that, it's going to be in U.S. dollars with CPI -- U.S. CPI inflators and a reasonable tolling percentage, and there'll be approximately 25-year contracts. So -- and we do try to highlight this in the presentation. But with the ASAP, which is a full -- it's a 100% tolling/capacity contract, no resource risk. And it's a 20-year contract with the Mexico a 25-year contracts, again, all USD, and there's a tolling -- reasonable tolling percentage there. So the actual -- extending the overall tenure of our contracts, but also, I would say, the quality of the contract and the revenue profile is improving as well as is the credit -- the average, call it, credit rating of the jurisdictions.

We are also pursuing several other paths and projects in Mexico, and 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. So that's coming relatively quickly.

And as we have mentioned before, we are also participating in several, call it, RFP -- more traditional RFP processes in several of our other markets, including Dominican Republic and Puerto Rico. And 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 3 months. So in the next 3 months, we should have line of sight on a significant amount of, call it, further growth for us. So that's coming, we think, relatively quickly.

I would also mention that lastly that we do outline these, call it, 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 will not -- that do not have the capacity to build a project, raise the capital for the project, and they're in all these markets. And so, 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. But 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 we will -- that does not mean we won't have other options in those key markets. So I think that there's, call it, some insurance there that we will be able to significantly grow the pipeline.

So as you can see, with these recent announcements, plus these other process 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.

So that's it for the formal comments. So we can open it up for questions now.

[Operator Instructions] Your first question is coming from Nick Boychuk with ATB Cormark Capital Markets.

In Mexico, I appreciate the color that you gave on the quality of the contracts, tenure, 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 megawatts of solar could potentially generate in incremental cash flow, EBITDA pickup, et cetera.

Yes. So I think the -- I've seen some estimates in the sort of 25 to 30 EBITDA for those 3. Now that's the total -- that includes the energy and the tolling, right? So 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 it's probably going to go up. However, so will the revenue and EBITDA. But so I think for now, it's good to use that sort of 25 to 30 because -- and that's -- 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.

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?

Well, I just think it's that the grid upgrade estimates were true just that, and they tend to have tended to -- once you actually cost them out and 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. So, in many ways, it makes the overall picture better.

Makes sense.

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

Okay. That makes sense. And when you're looking at this opportunity relative to Puerto Rico, because my understanding is in Puerto Rico, you're 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? Like how should we be thinking about that mixture between the 2?

Well, it's for sure more expensive on the islands, particularly Puerto Rico, and conversely, we think it's going to be based on even conversations, it's going to for sure be cheaper in Mexico, not necessarily the equipment provision, although even in Puerto Rico because of tariffs, 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's going to be a big difference on that side in terms of it's going to be much better.

I don't -- Nick, I don't 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 have -- we would look at in Puerto Rico. I just don't have that number. But directionally, it will be a big difference, which brings your energy -- the energy price of solar is going to be much lower. I would also say though that there needs to be an adjustment because there's a full U.S. CPI inflator in the Mexico you're 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, that your average price is quite different than if you assume, call it, a fixed price, let's say, in Puerto Rico.

Yes, makes sense. And last for me, just as you're talking about these opportunities that are coming up of 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?

Yes, it's a great question. It's something we are focused on. I up until, let's just say, a month ago, I felt that we could do 2 projects, 2 distinct projects with the team like because we already do have people that are only project management on staff, and I think we can, for sure, do 2 of those. So if you include the ASAP, call it we could do 1 solar project in Mexico without any new hires. But so 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. So the model is going to be really -- the good news is, we have a lot of what I would call corporate support in Managua. We have a big team there, but that's more sort of support and services. And we also have, to a lesser extent, that kind of support in Toronto. And we're going to have to hire, call it, 4 or 5 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.

And then 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, which is Don Humberto, which we think will be ready to build, call it, November, the 2 bigger ones are next year. So that does give us some time, I would say, to sort of fill the roles and get the org chart nailed down. If the 2 big ones were sort of Q4 start of construction, that would be, I think, a bigger risk for us. So in some ways, that does help us, right? But they're not going to be ready to build this year.

And then to the extent we do more, I would say they're likely going to be -- there's still going to be a staging in terms of when they're going to be ready to build. So it won't be much later. It will be later. And then -- but I would say that there's also -- yes, 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. So there's also, I think, real benefits to having scale there as well.

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?

Yes. 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 we're -- our experience has been to date that we've always done better than that. So 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 can get closer to 12.

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.

Thank you.

Thank you.

Ladies and gentlemen, welcome to the 2026 Annual Meeting of Shareholders of Polaris Renewable Energy, Inc. Please note that the meeting is being recorded. I would like to introduce Jaime Guillen, Chairperson of the Board of Directors. Mr. Guillen, the floor is yours.

Good morning, ladies and gentlemen, and thank you for joining us today. My name is Jaime Guillen, and I am the Chairperson of the Board of Polaris Energy. We have determined that I will act as Chairperson of this annual meeting. On behalf of the Board, I wish to express thanks to those shareholders who have submitted their proxies in advance of today's meeting. Since this meeting is being held in a virtual-only format via live webcast, it is necessary to set out a few rules for the orderly conduct of this meeting.

First, questions in respect of a motion can be submitted by a registered shareholder or duly appointed proxy holder by clicking on the Ask a Question button on the left side of the platform and typing out and submitting their comments and/or questions.

Two, questions will only be addressed during the Q&A period at the end of the meeting, provided that questions regarding procedural matters or directly related to the motions before the meeting may be addressed during the meeting itself. For the purposes of the meeting today, the voting for all resolutions will open at once. Registered shareholders and duly appointed proxy holders who have logged into the TSX Trust web platform and their valid 12-digit control number and who wish to vote during the meeting, may vote live throughout the meeting until voting is announced closed by doing through the vote button on the left side of the platform.

If you completed a proxy in advance of the meeting and prior to the proxy cutoff time, your vote has already been tabulated according to your instructions. If you have already voted your shares by proxy prior to the meeting, you do not need to do anything at this time. Please note that if you have logged into today's meeting using your control number and you would like to change your vote, you will have revoked any previously submitted proxies. And in order to have your vote counted, you will need to complete the online ballot through the voting button during the allotted time.

We will now proceed with the formal portion of today's meeting. I will move each item, and I have been advised by Mr. Murnaghan, the CEO of Polaris and a duly appointed proxy holder in attendance today, that he would be prepared to second each of the motions I so move. Accordingly, unless there are any objections, I will take such motions as seconded with no further action needed. I will remind you that only holders of common shares as of the record date for this meeting, being the close of business on April 29, 2026, or their duly appointed proxies are entitled to vote or ask questions at this meeting.

You are a nonregistered shareholder, if you hold your shares through a bank or intermediary and you have not arranged to be appointed as proxy for such intermediary with respect to your shares.

If there are any registered shareholders or duly appointed proxy holders who have inadvertently logged into the meeting today as a guest, but intend to vote by online ballot during the meeting, please log back into the meeting as a registered or duly appointed proxy holder as per the instructions provided to you so that you can vote and/or ask questions at this meeting.

I now call to order this Annual Meeting of Shareholders. In accordance with the company's bylaws, I will preside as Chair of this meeting.

With the consent of the meeting, I would ask Anthony Jelic, the company's CAO and Corporate Secretary, to act as Secretary for this meeting. I would also ask TSX Trust Company to act as scrutineer for this meeting to report on the number of common shares at this meeting, to tabulate the votes on any ballot or polls taken at this meeting and to report to me as the Chair.

The notice calling this meeting of shareholders was dated May 15, 2026, and was made available to all shareholders in accordance with the Ontario Business Corporations Act and National Instrument 54-101 of the Canadian Securities Administrators. The purpose of today's meeting is set out in the notice of meeting. We have received an affidavit of mailing from our transfer agent indicating that the notice and access materials were properly mailed to the company's shareholders of record as of April 29, 2026, and made available under the corporation's profile on the SEDAR website. Unless anyone objects, we will dispense with the reading of the notice of meeting.

The notice and access materials were mailed to shareholders on May 15, 2026. Copies of the notice of meeting, management information circular and form of proxy are available under the company's profile on SEDAR and the company's website. I direct that a copy of these materials, together with proof of mailing, be attached by the secretary to the minutes of this meeting.

Pursuant to the corporation's bylaw #1, quorum for the transaction of business at this meeting is one person present in person, being a shareholder entitled to vote at the meeting or a duly appointed representative or proxy holder for an absent shareholder so entitled and holding or representing in the aggregate, not less than 45% of the outstanding shares of the corporation entitled to vote at the meeting.

The scrutineers' report shows that there are shareholders representing 9,807,284,000 common shares represented at this meeting. This represents 46.92% of the 20,901,618 common shares issued and outstanding as of the record date. I therefore declare that a quorum is present. I direct the Secretary of the meeting to attach a copy of the scrutineer's final report on attendance to the minutes of this meeting.

If you completed a proxy in advance of the meeting and prior to the proxy cutoff time, your vote has already been tabulated according to your instructions. If you have already voted your shares by proxy prior to the meeting, you do not need to do anything at this time. However, please note that if you have logged into today's meeting using your control number and you would like to change your vote, you have revoked any previously submitted proxies. And in order to have your vote counted, you will need to complete the online ballot during the allotted time.

As due notice has been given in accordance with the Ontario Business Corporations Act and our own articles and quorum being present, I now declare this meeting to be constituted for the transaction of business for which it has been called. During the course of this meeting, reference may be made to matters discussed in the management information circular. If you are unclear as to the meaning of certain terms, please refer to the circular or ask for a clarification at the appropriate time.

Today, there are 3 items of business to be dealt with at the meeting. First, we will present the financial statements for the most recently completed fiscal year to the meeting. Second, we will elect the directors of the company. Third, we will seek approval to reappoint PricewaterhouseCoopers LLP as our auditors and to authorize our directors to fix PwC's remuneration.

Management is not aware of any other business to be properly brought before this meeting. Should any other matter properly come before the meeting, I, as the Chair, will deal with such matter in accordance with the company's governing documents and applicable law.

The first item of business is the presentation of the audited consolidated financial statements of the company for the fiscal year ended December 31, 2025, together with the auditor's report thereon. These materials have been made available to shareholders and are available on the company's website and under the company's profile on SEDAR. These financial statements are presented to the meeting, but no action is required with respect to them. I will entertain questions with respect to the financial statements of the company in the general Q&A period at the end.

The next item of business is to set the number of directors at 6 and the election of directors themselves. We will only be nominating the following 6 persons to serve as directors: Myself, Jaime Guillen; James Lawless; Marc Murnaghan; Marcela Paredes de Vasquez; Catherine Fagnan; and Adarsh Mehta. As no nominees were received by the company in accordance with our advanced notice policy, I declare these nominations closed.

The form of proxy for voting on the election of directors sets out each proposed nominee separately and allows you, as shareholders, to vote on each director individually. Is there any discussion on the motion on the floor? There being none, I'll continue.

As mentioned at the beginning of this meeting, voting today will be conducted by a single electronic ballot. We will, therefore, continue with the next item of business, which is the reappointment of the company's auditors, and you will be prompted to vote on the election of each director after the presentation of all business items for this meeting. Unless there are any questions or discussions, I will move to the next item of business.

The next item of business is the reappointment of our auditors, PricewaterhouseCoopers LLP, and the authorization of the Board of Directors to fix the auditor's remuneration for the 2026 fiscal year. Is there any discussion on this motion on the floor?

The motion is now on the floor. You will be prompted to vote on the reappointment of the auditors after the presentation of all business items for this meeting. I will therefore move on to the next item of business.

As previously mentioned, voting today will be conducted by an online ballot. You will now be prompted to register your vote in respect of each of today's business items for this meeting. Click the Voting button and cast your voting pressing on the for or withhold button next to the name of each proposed director and next to the resolution with respect to the reappointment of PricewaterhouseCoopers LLP as the company's auditors.

I declare the polls are now open for voting. After 3 minutes, the polls will close, and you will not be able to change or submit your vote. We will wait for a few moments for the completion of the online ballot and then move on to the remainder of the meeting.

I'll continue while we are casting the ballots. We will provide the registered shareholders and duly appointed proxy holders approximately 3 minutes to complete the online ballot. Once the voting is completed, I would ask that the scrutineer compile the report regarding the results of voting on all business matters. We will receive -- we will reconvene in a few minutes with the scrutineer's report and the voting results themselves.

[Voting]

I declare the polls are now closed. So thank you, and thank you for waiting. I have also received the scrutineer's report and can confirm the following.

Each of the nominees put forward have been elected as directors of the company to serve until the next Annual Meeting of Shareholders or until their successors are elected or appointed. The reappointment of PricewaterhouseCoopers LLP as the auditors of the company has been approved, and the Board of Directors of the company has been authorized to fix their remuneration. I direct that the results of the poll for the election of the directors be included in the minutes of this meeting announced in a press release in accordance with the policies of the TSX and filed on SEDAR.

If there are no further business to be brought before this meeting, I move and it is seconded that the formal portion of today's meeting be concluded.

As the formal business of the meeting of shareholders of the company has now been completed, I would like to say a few words before turning over the floor to Marc Murnaghan, President and CEO of Polaris Renewable Energy.

First of all, just again, thank you for joining us today. Just wanted to kind of just give a few introductory remarks prior to passing the baton over to Marc. And I just kind of wanted to speak generally about what we're seeing in the renewable energy markets generally.

I mean I think it's fair to say that the renewable energy markets have seen some headwinds in certain countries like the U.S. But in Latin America, that's not really the case or at least not what we're seeing. Many countries are rich in solar, wind, hydro and geothermal resources. Some like gas or other carbon fuel alternatives and importing them has really a very high cost because the infrastructure is not there. Others do have carbon fuels, but not the infrastructure to process and transport those fuels.

So what you have is renewables don't become just an energy option, but in many cases, they are the lower cost option and/or the most accessible option. And as many countries around the world have once again realized as a result of the Ukraine and Iran conflicts, it is also an energy security and geopolitical consideration.

On the other hand, we're seeing new demands for energy driven by AI, mining, nearshoring, microgrids, all of which are creating new opportunities for energy in general, but in many cases, complemented or for renewable energy itself. Mexico, for example, has recently announced a major renewable energy program to meet its energy needs. Polaris has been focused on renewable energy in Latin America because of the fundamentals of this market.

As you well know, it has been building a regional platform with management teams and projects spread across multiple countries. And now I feel it is well positioned to benefit from these broader market trends.

So now Marc will provide us an operating update, but also speak more about these opportunities Polaris is pursuing in Mexico, which is a really interesting market right now and some of the other countries in which Polaris is actively searching for new opportunities. Marc, with that, I pass it over to you.

Great. Thanks, Jaime. I appreciate the introduction. Yes, really, what -- in terms of an operational summary, I think that, as Jaime mentioned, I'm going to be more focused on the growth initiatives. But the nice thing with our projects is we've had a very good track record the last 12 months; the last 5, 6, 7 years of very high availabilities; relatively low operating costs, high margins, and that continues. So -- and I'd like to thank all the employees for all the efforts to make that possible because it is a 24/7 business.

What I think has changed with us, and it does tie into Jaime's intro comments there is that we are -- I think our growth really is accelerating. Anton, if you can just go to the next slide. This is just one slide from our presentation, we call it the pipeline pyramid. But I don't -- this 12 to 24 months ago, we really didn't have this. We do now. We spent the last 12, 24 months trying to add new projects for both the next 12 months, the next 24, the next 36 months. So -- and we are starting to see the fruition of those labors.

We recently have announced that the ASAP project in Puerto Rico was approved. I can tell you that on June 12, we did sign the final contract. So that's full steam ahead. We are finalizing the procurement with the main supplier, which is the battery supplier, and we hope to have that signed within the next month. And we think that, that's, call it, a 12-month cycle -- construction cycle to get that into operation. And that's a really big step for us, that would actually be next to San Jacinto, our second largest project in the company. So we're very excited about that. That's the 72 megawatts that we call -- I call construction ready there.

And then right below that line, what I call late-stage development is the 280 megawatts, which is the 3 projects that we recently announced or have been awarded in Mexico. So we don't have the final agreement signed on that, but we do expect that, that is the next step, and the government is working very hard to get those signed as soon as possible. So that -- we would look to be moving that amount, which is a substantial amount for this company from, call it, late-stage development up into construction ready in the next 6 months. So the plan would be to sign contracts shortly, then get them basically ready for construction in the next 6, 9 months.

So that -- just those 2 alone, the ASAP project and the 3 Mexico are major step function changes for the company, very material, and I think it gives people a line of sight on almost $100 million of EBITDA from where we are right now, which is between $50 million and $60 million. So that is something that is transformational for the company, and we're very excited to go and execute on that.

Additionally, below that, we have numerous development activities that are happening that are -- we are gunning on having those come into reality in the next 12 months. And they're in -- the 3 key markets that we're focused on would be Puerto Rico. So we are looking at doing some more there in addition to the ASAP. We are looking at some BESS projects in the Dominican, and we also have a combination of solar and BESS in Mexico, and we do expect more projects in Mexico.

And you can see the numbers there. They're all large and substantial for us in materials, which -- and I think that, that can -- and we have another slide in the presentation, which shows that if we can execute on, I would call it, even 50% of the early and mid-stage development, we can give people a line of sight on $150 million of EBITDA, which I do think makes us -- taking us from $50 million, $60 million, now to $150 million in, call it, 4, 5 years would be a substantial change in the company and really puts us on the radar.

I think it's really important from a public market company perspective, but also in terms of attracting other forms of capital in terms of infrastructure funds and debt capital in the bond markets as well. So all of this points to, I think, lower overall cost of capital for the company. And so we really have made a focus of accelerating the growth. We're just starting to see it right now.

And the good news is we have the significant balance sheet capacity to execute on this. We have $100 million in cash on the balance sheet from the bond we did several years ago or 1.5 years ago. We're generating cash in excess of the dividends. So we have free cash flow that we can use to grow the business. So we are now going to be putting that capital to work and then we can grow significantly without the need to raise any equity. So we're very excited about the next 12, 24 months. That's it for me. Thank you, everybody, for attending.

Great. Thank you, Marc. So now we're moving to the Q&A period. And I ask that any attendee that would like to ask a question to do so through the Ask a Question button on the platform. We will answer as many questions as time permits. When asking a question, if you could state your name and the entity you represent, if any. Please limit your questions to topics relating to today's subject matter and keep your questions short and to the point. We will now give attendees a brief moment to type in any questions.

We have not received any questions. So I think we would like to kind of just thank you again for your participation today. And on behalf of the management, the Board of Directors and our employees, I would like to take the opportunity to thank everyone again for attending. I would like to thank the shareholders, in particular, for their commitment and continued support, and we look forward to your attendance again next year.

Thanks, everyone.

Thanks.

Thank you for attending today's meeting. You may now disconnect.

Good day, ladies and gentlemen, and welcome to the Polaris Renewable Energy Inc. First Quarter 2026 Conference Call. [Operator Instructions] And please note, this conference is being recorded. I will now turn the conference over to your host, Alba Ballesteros, Chief Financial Officer of Polaris Renewable Energy. Ma'am, the floor is yours.

Thanks, Sally. Good morning, everyone, and thank you for joining us for our 2026 First 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, are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. 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 walk through our operating and financial results for the first quarter of 2026. Marc will then provide additional commentary on our Q1 performance and growth initiatives. Following our remarks, we will look forward to taking your questions. Starting with production.

Overall, the first quarter 2026 demonstrates the benefits of our diversified portfolio despite temporary external factors affecting production during the quarter. While consolidated production decreased 5% year-over-year due primarily to the scheduled major maintenance in Nicaragua and elevated curtailment in the Dominican Republic, the broader portfolio continued to perform well with a strong hydrology in Peru, a stable production in Ecuador and Panama, and a full quarter contribution from Puerto Rico, helping offset a portion of this impact. Importantly, these temporary factors did not materially affect the company's financial flexibility, liquidity position, or our ability to continue advancing strategic growth initiatives. In Nicaragua, Unit 3 underwent planned annual maintenance during February, which resulted in 17 days of downtime.

Plant availability outside the maintenance period remained strong. In the Dominican Republic, curtailment averaged 42% during the quarter compared to an average 7% curtailment in the same period last year, materially impacting realized generation. While curtailment has moderated quarter-to-quarter, in Q2, the timing of normalization remains uncertain. In Peru, hydroelectric production increased year-over-year due to improved hydrological conditions and resource availability. During March, Peru also experienced temporary energy shortage, which resulted in elevated spot market pricing and positively benefit Canchayllo following fulfilment of its annual PPA obligations.

In addition, Puerto Rico contributed a full quarter of operating results during Q1 2026 compared to only 1 month of contribution following the acquisition in the comparative period last year, adding 12,698 megawatts hour to the consolidated production during the quarter. In Ecuador and Panama, production remained generally consistent with the comparative period last year, reflecting stable hydrological and solar resource availability as well as continued strong plant performance.

Moving on to financials. From a financial perspective, revenue for the quarter was $19.8 million, down 3% from $20.3 million in Q1 2025. Adjusted EBITDA was $13.5 million compared to $15 million in the comparative period, reflecting the lower production levels and revenue discussed earlier and the cost impact from integrating our Puerto Rican operations. Direct costs across the rest of the operations remain in line with 2025 levels. Cash flow from operating activities was $8.5 million, and we ended the quarter with $97.5 million of total cash, including restricted cash, up from $93.2 million at year-end 2025. Our balance sheet remains strong, and we continue to maintain financial flexibility and focus on execution and advancing the pipeline for long-term value creation. I would also like to highlight that we continue to prioritize shareholder returns. We have already announced that we will be paying a quarterly dividend on May 22 of $0.15 per share to shareholders of record on May 14. With that, I will turn the call over to Marc. Thank you.

Thanks, Alba. So just a few minor comments on operations. As Alba mentioned, we completed the major maintenance, planned maintenance, at San Jacinto. On a pure sort of days of downtime that would have cost about 8,000 megawatt hours. But given that we need to close a whole bunch of wells, some of those take -- like when you reopen them, but they take a little bit longer to actually reach their pre-maintenance capacity levels. So when we look at the quarter, I would say, given that process, not for all the wells, but for a couple of the wells, it ends up being that instead of sort of 8,000 negative megawatt hours per quarter, it's closer to 12,000 to 13,000.

So I think the actual, call it, maintenance cost in the quarter was about, let's say, 12,500 megawatt hours approximately. So -- and then the wells have definitely recovered to their pre-maintenance capacity levels, and they're at sort of levels that are as per our expectations going into the year. And the Dominican curtailment was somewhat higher than anticipated. It was -- we think it was about 7,000 megawatt hours estimate. We -- this will be stronger in the winter months. It has come down in April and continues to come down here in May. And so we expect that to continue. We are targeting an annual number of sort of 40,000 to 45,000 megawatt hours for the year. Given that, we continue to improve next year and the following, given the plans to put large-scale SADA in place in the next 18 to 24 months in the country.

So that was a negative, although it was somewhat offset by the hydros in both Peru and Ecuador, which performed really, really well in the quarter. So we're happy about that. Based on those comments, I would say though, for full year consolidated production guidance, down slightly to about 760 to 770 gigawatt hours. In terms of the growth, on the last call, I mentioned that we had signed an LOI on a very small solar project. It continues to move. Unfortunately, the vendor just wasn't, call it, legally ready to move to the documentation phase. We finished our technical diligence. So we're ready to go, but the ball is in their court. So we are confident moving forward, not likely to close until Q3.

The big one that we're all waiting for is the ASAP approval. PREPA Board in Puerto Rico did approve the project on Feb 19, which we've been waiting for, for a long time. We are still awaiting approval from the FOMB, which is the last approval needed. Once they approve it, it does go back to PREPA for signature, but that's not an approval at that point. So this really is the last approval. I know this is taking longer than what everybody wants. We do not think that there is a problem with it. There is no issue. There are just some other things that are happening that are taking FOMB's attention right now. And so we are optimistic we will receive it prior to the end of this quarter.

In Puerto Rico, we are also participating in an RFP that is where our final proposal is actually due this Monday. So that is an even larger project. It's solar plus BESS. The process is moving relatively quickly. And we think it will move quicker than the ASAP process, given that it's the infrastructure, the P3 group that is driving this. Once we submit the final proposal on Monday, we will have notification as to whether we're, I think, call it, being chosen in late June, so end of Q2, with contracting targeted for Q3. So that would be quite soon. And those would be the two main things that we're working on in Puerto Rico. We do have other conversations with developers going, but I would say our priority really is obviously ASAP, but also this RFP if we're able to have success in that. And then in terms of the other main market we're focusing on right now is Mexico.

We have approximately 300 to 400 megawatts of solar projects in a current -- technically not a bid process, but let's call it that. It's a first bid process that will be concluded very early Q3. So we are moving forward on that, which is a reasonable amount of megawatts for us. We also have approximately 300 to 350 megawatts of projects that are going to be in a subsequent process that is going to be on the tail end of that, but not by much time. We think that can likely wrap up in Q3 -- sorry, at the end of Q3. So the first 300 to 400 will have line of sight beginning of Q3, the next 300, end of Q3. And then I would say, in addition to these two processes, we have -- and projects. We have another 200 megawatts of solar and a large storage-only project that we will be moving forward throughout the year.

And with those, we would be aiming to achieve contracts early 2027. So nothing to announce yet, although I don't think it's that long before we will have some announcements for Mexico. So we have high expectations for news on that front in the near term. And I think with -- if we achieve ASAP in the short term here and Mexico, although it's taken longer than we want, I think you will see the path forward for the next 2, 3 years will be much more defined and it's -- everyone will know where we're driving at, what the capital requirements are, what the uses of capital that we have on the balance sheet are and sort of what the projected EBITDA numbers are going to be for the next 3 or 4 years. So with that, I'll open it up for questions.

[Operator Instructions] Our first question is coming from Nick Boychuk with ATB Cormark.

In Puerto Rico, can you give a little bit of an update on the battery energy storage procurement process, specifically costs, construction, and just your thoughts on how that might then play out into some of these other battery energy storage opportunities?

So we are in continual conversations with the groups, or really two key ones that were in the procurement process. Given the lithium prices, we do know that the costs are going to go up somewhat. I think it will be in the -- when you look at the total project cost, though, I don't think it's going to be super material. So there will be some increase in the CapEx, I would say, maybe $5 million to $8 million. And so -- whereas we were at sort of $60 million, $65 million. So I think it's going to go up for sure. I'm not worried about time lines, though. It's really -- I think it's just a cost issue right now. I think time lines are still very good, so delivery within 9 months kind of thing.

Okay. So we're still on track for, call it, an H2 full production in 2027 in ASAP?

Yes.

Okay. Regarding the Dominican curtailment, you mentioned that storage could be added there. How much storage would that market need in order to address this issue? And are you getting any signs from them on how they want to address that? Is it going to be a similar program to ASAP or something a little bit different?

Yes, I think it will be a very similar program to ASAP. We've been in consultation with them for over a year now. And I think it's just -- it's very much a SADA type contract where they're the ones doing the dispatch at specific nodes. I think we have discussed what they have sort of, I would say, not published, but discussed is about 400 to 500 megawatts. I think that, that -- I think that's in the right range. I think 400 to 600 is the right number. And if you look at -- if you take, let's just say, 400 megawatts times 4 hours, so 4 hours is the right number, too. So 1,600 megawatt hours, times that by maybe 150, 200. You're talking about -- to, call it, resolve the issues on the island, it's sort of $200 million to $300 million CapEx issue, which is not that big in the grand scheme of things.

So they are -- we're still waiting for the final, call it, bid process, and they held the meeting, call it, 1.5 months ago, they kind of gave those guidelines as to what they're looking for and that they will come out with the final numbers shortly. So I think in the next month, we'll know exactly whether it's 400, 500, 600, 4 hours, what the time lines they're looking for. But that will get announced, I think, very shortly, and then we'll know exactly what those numbers are. And I do think we will look to participate in that because I do think that will resolve the situation on the ground. I think if they come out -- let's say they come out by the end of June or something at the latest.

Realistically, let's say, that's a 3-month process, right, to run it. I think you could have something in Q4 of next year, maybe it's Q1 of the following year. But so in terms of whether we're sort of really, call it, participating/winning in that process, just vis-a-vis our current production, we would see curtailment this year, curtailment -- less curtailment next year, given just the overall demand growth, but then some reversion to normal the following year.

Okay. That makes sense. And in Mexico, you mentioned there's those three different bid processes. I think the total is very close to about 1 gigawatt of solar plus a little bit of battery energy storage. I just want to confirm, those are all independent projects, right? Like you're -- in the first bucket, you mentioned 300 to 400, nothing slips into the subsequent two processes. Like these are independent 1 gigawatt of opportunities to you?

Yes. And I should have maybe highlighted that, but it's an important point, which is that the way that they're doing things there is they actually call them convocatorias where people get invited, you have to be pre-cleared, get invited, and they're running them sequentially. If one of your projects doesn't move forward or you decide you don't want to continue moving it forward in, let's say, the first and most current one, nothing prevents you from going into the next one or the next one. So it's not as if they just then fall off forever. So -- and given, call it, the need for power there, the demand pull, and the reserve margins are at sort of all-time lows there, their needs for procuring power are very high. So obviously, we'd like a lot sooner than later, but I don't think that if one of our 100-megawatt project doesn't sort of go forward in the current one, that doesn't mean it falls off completely. And even though it's three processes, they're not going to be that far behind one another.

Does that have an implication for you on financing?

We're talking one quarter. This one is, call it, all happening this quarter. The next one is going to have the next quarter, and the next one is probably the following quarter. So it should really roll out quite quickly.

Okay. I guess on that timing and that speed, does that have an implication or a change in how you're thinking about financing a gigawatt of solar?

A little bit, but I would say that first is cash on the balance sheet, which we continue to build cash. Second, I think we are quite confident that we have more capital available on the fixed income side based on what we did 1.5 years ago. I would also say though that for Mexico, there's for sure more project finance there if we wanted to tap that. But these are good long-term contracts. There's a lot of banks very willing to lend there. And I would also say that to the extent that you kind of use up those sources and you're saying, oh, well, you need equity. We look to do that. But I would say if Polaris share price is anywhere near where it is today, we would more likely look to having a local equity partner for Mexico only.

But there is a lot of, I would call it, equity capital, infrastructure capital in Mexico that I think is very interested in sort of partnering with the Canadian public company on these projects. So I think we've got several options. But it would -- all of that even going to the equity side is because it's all happening quite quickly, right? And our view is that this stuff hasn't been happening quick enough for us. So if it really does get to that, it's cash first, more debt. Because our total -- our balance sheet is still very conservative, right? So then more debt. And then if it's happening so fast we require equity, we would look at several -- we would have several options in my opinion.

Our next question is coming from Baltej Sidhu with National Bank of Canada.

Just a couple from me. So on the curtailment of the DR that increased significantly here in Q1, could you just share or elaborate some views on where that kicked out relative to your expectations for the year? And that revised guidance downward, is that stemming totally from the curtailment -- updated curtailment projections? Or are there other any elements that we should be considering?

Yes, that is only from curtailment. The plant, technically and operationally, totally fine. We were expecting high in January. It's very much an air-conditioned load. So -- and it's winter. So believe it or not, if it's 27 degrees high there versus 33, does make a big difference on the load. So we were expecting January to be high. February was lower, but then March was higher than everybody was expecting because they were running several tests for some, call it, thermal units that they needed to run for 30 days. So the renewables were curtailed at a higher level. It has dropped since then.

So I think we're going to be in the 10,000 to 12,000 a quarter for the next couple -- for this quarter, next quarter. And then by December, it will start to creep up again. So I think we're running sort of 30% to 40% curtailment this year, maybe 5%, 10% lower than that next year based on just the overall load growth. And as I mentioned earlier, to the extent they go and contract with SADA, which I think they will, it should be much lower, call it, in 2028 and normalizing thereafter.

So if you get batteries online, relatively, let's say, at scale in 2028, it should revert back to normalized values. If not, be minimal, if anything.

Yes. I would say if it hasn't, we should be in the 5% to 10% range.

Awesome. And then for the PR RFP, could you just elaborate on how the economics on an IRR basis look there? And what could COD look like if we're targeting Q3, I think, was what you had mentioned in the prepared remarks.

I think the first one is to target IRRs. I would say -- well, I mean, it is a competitive process, so I need to be somewhat guarded.

Competitive...

But what I would say is most people -- what I would say is I think competitive market there is, call it, unlevered of 12% plus maybe a bit, with levered of 17.5% to 22.5%. I think that's what we've seen and what we think most participants view the market out there. The ASAP is going to be a bit higher, we think, because we already have an interconnect, that's a big reason why they wanted to do ASAP. But for new connections, it's more in the range I just said.

Great. And then just given the organic development opportunities that we're seeing in your growth pipeline, if you were to rank these on a priority basis or no ranking, how would you kind of classify them should they all be available as of right now?

Good question. Obviously, the ASAP is #1 that we're waiting on. And then I would actually put the things we're doing in Mexico as #2, or at least the first one. And then I would put right on its tails though, the RFP in Puerto Rico. And then more Mexico, and then I would say the DR SADA after that. And then after that, it's M&A. I think we have the small one. I would just say that based on what we're looking at, we do think that the development of the solar and/or the BESS or the solar and the BESS is just a higher return than some of the M&A we've looked at, which has come down in valuation, but not enough, not close enough to justify it in our opinion.

And do you see that spread in valuation continuing to compress? Or do you see kind of -- from your remark, that it's come down. Do you think it could come down a little bit more? Is it going to stabilize out where the market dynamics are playing out?

It's a great question. I would -- I don't see it coming down that much. I think like it already did. The issue for us is it just didn't come down quite enough for us. And so I think the issue is more about us necessarily than them. A lot of these projects, you have high net worth owners, right, that might have $10 million or $20 million or $30 million in a project, and their proxy is a bit more -- they compare that to owning long bonds, right? So if they think that they can still get a 10% return in a solar hydro project, it's not -- I think that's not great, but if they're comparing it to just buying munis, T-bills, or long bonds, then -- so I find that they're a bit sticky. They're stickier than you would think.

So whereas I'm actually more confident if we actually start putting some runs on the board here in terms of these growth projects that we will sort of -- we will reduce the gap, not by them coming down, but by us going up. And I think for that to start to look, call it, attractive to us, I don't -- we're not talking 3 points. I think it's about 1 to 1.5 to get back to where some M&A is accretive.

Our next question is coming from [ Patrick O'Donnell ] with Brooklyn Capital.

I had a two-parter on the Mexico opportunities. The first part is, how would you compare the project development process in Mexico to other jurisdictions that you're working in, in terms of navigating the government permitting regulations, finding contracting partners, and their willingness to work with outside or international companies?

I would -- on an actual dollar basis, it's lower. I would -- let me rephrase that on a per megawatt basis, it's lower. The projects are bigger. Maybe the dollars are somewhat higher, but on an actual unitary basis, they're lower. And I would also say because of the demand pull, at least what we're seeing is it's moving. The bigger issue that we experience is time, and in some of the other markets that we're currently in, the time is much longer, whereas the government side is really engaged in Mexico. And is it crazy fast? No, but it is moving at a reasonable clip there, whereas in some of the other jurisdictions, the development time lines are much longer.

Got it. That's great to hear. And in terms...

And I would also say that -- sorry, I think there was also international. I would say that -- at least we sense -- I mean we're biased, but we do -- the sense we're getting is that at least Canada is in, call it, a good spot as a foreign investor right now in Mexico.

Yes. So they seem pretty friendly with these kind of international company partnerships establishing kind of long-term infrastructure in their country.

Yes. That's very much the sense we're getting.

That's great to hear. My next question is on those opportunities, what are the typical offtake terms that you're seeing from these projects in terms of like the term, and if there's anything you could share on pricing?

Well, the key ones that I can share would be getting good tenor, so call it, 20-year plus or minus, but up to 25. So good length can do U.S. dollars, which is really important for us. So we definitely are -- I think our overall, call it, credit profile, contract profile would actually improve significantly. And I can't really comment on pricing, but I would say we're seeing -- we think it's going to be at returns that are attractive and are not going to be sort of bid down to, call it, below acceptable levels.

Got it. And for these size of projects, are you kind of feeding into like national utility infrastructure? Do you have to have specific offtakers like industrial customers? I guess how do you -- what's kind of the makeup of the offtakers?

You can do either, but our goal right now is just the grid scale. The main government entity there is called CFE. So we're really gunning for that for now. There are conversations that we're having with some where you do direct to industrial buyers. Sometimes that's behind the fence, so they could even contract with you directly at a grid scale. But we are having those. That's not our #1 goal right now. I do think that that's an opportunity there, just again, given the demand need and you have a lot of industrial consumers really wanting it. But it's always a bit trickier in terms of credit and doing project finance on those. So I wouldn't say that, that's our priority right now.

Thank you. Ladies and gentlemen, we have reached the end of our question-and-answer session and therefore, our call. This will conclude today's conference, and you may disconnect your lines at this time. And we thank you for your participation.

Thank you.

Thank you.

Greetings, and welcome to the Polaris Renewable Energy Inc. Fourth Quarter 2025 Conference Call. [Operator Instructions] And please note, this conference is being recorded. I will now turn the conference over to your host, Alba Ballesteros, Chief Financial Officer with Polaris Renewable Energy. Ma'am, the floor is yours.

Thank you, Ali. Good morning, everyone, and thank you for joining us for our 2025 fourth quarter earnings call for Polaris Renewable Energy, Inc.

Before we begin, we would like to remind you that in addition to our press release 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 will 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, are subject to a variety of risks and uncertainties that could cause actual results to differ materially from current expectations. 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 walk through our operating and financial results for the fourth quarter 2025 and full 2025 year. We will then turn the call over to Marc, who will provide a review of our 2025 performance and discuss the outlook for our business and growth prospects. Following our comments, we look forward to taking your questions.

Overall, 2025 was a year of measurable progress for Polaris. We delivered year-over-year growth in energy production, revenue and adjusted EBITDA. Solid operational execution and disciplined cost management, a strong operating cash flow generation, materially simplified and optimized capital structure and continued capital returns to shareholders. Importantly, we achieved this while maintaining balance sheet strength and financial flexibility, which remains central to our long-term strategy.

Starting with operations, for the full year 2025, consolidated energy production totaled 810,731 megawatts hour compared to 764,756-megawatt hour in 2024, representing a 6% year-over-year increase. This increase reflects the addition of the 26-megawatt Punta Lima Wind Farm in Puerto Rico, a strong hydrology in Peru and Ecuador and solid plant availability across our portfolio. The strongest performance over the year was achieved by our hydroelectric projects in Peru and Ecuador. In Peru, favorable hydrology and excellent plant availability led to a 12% increase year-to-date in hydro output for the Peruvian project, following what had been a historically dry year in 2024.

Our hydroelectric facility in Ecuador also had an exceptional year, producing 19% more energy year-to-date versus 2024 and 26% more energy in the fourth quarter of 2025 versus the comparative period in 2024, thanks to a strong rainfall and an excellent technical performance, resulting in the highest resource availability since operations began. In Puerto Rico, 2025 marked the first year of contribution from Punta Lima, adding 42,056 megawatts hour post acquisition and strengthening our technology diversification.

In Panama, solar generation in the quarter was 5% higher than in the 2024 comparative period. These increases offset lower output from Nicaragua where expected geothermal normalization and natural streams declined, reducing generation by about 5% in 2025 versus 2024. Production at our Dominican Republic Canoa 1 Solar Facility decreased slightly 2% year-to-date reflecting efficiency gains from the new panels installed in 2024, which allowed setting grid wide curtailments, which were 3,500 megawatt hours in the quarter and 5,900 megawatts hours for the year.

Overall, our diversified portfolio, spanning geothermal, hydro, solar and wind across 6 jurisdictions continues to demonstrate resilience and stability and remains one of Polaris' structural strength. From a financial perspective, adjusted EBITDA increased up to $56.5 million, reflecting a 3% increase year-over-year. Despite inflationary pressures and the onboarding of new assets, operating margins continued to perform strongly, benefiting from disciplined cost management.

I would like to highlight that we have already announced that we will be paying a quarterly dividend on February 27 of $0.15 per share to shareholders of record on February 17. Polaris now has a 10-year track record of consistent dividends, having returned approximately $105 million to shareholders in that period. Also during 2025, under our Renew NCIB program, we repurchased and canceled 169,800 common shares for approximately $1.5 million during the year, of which 80,000 were purchased in Q4 for approximately $0.8 million. Today, following debt repayments in Q1 2025, and Punta Lima Wind Farm integration, Polaris has a simplified structure, ample liquidity and the year 2025 with a consolidated cash position of $93.2 million, including restricted cash and an optimized and energy diversified platform for further growth.

This positions the company well to deploy capital into expansion opportunities. With that, I will turn the call over to Marc. Thank you.

Thanks, Alba. So just a few comments about sort of production and guidance on that front for this year. So we did -- as we messaged, we moved the major maintenance at San Jacinto from end of last year to this year. It has been completed and executed. As expected, no issues with the turbines, which is great. What that means in terms of, call it, total production on a consolidated basis for our budget for this year without any new plans, without any acquisitions, so we just take the existing plants in operation, with that, with the major maintenance there and some curtailment in the Dominican, our consolidated range for the year would be around 775 to 790 gigawatt hours for the year.

In terms of what we are working on, on the growth side, as people know, we really focused on the ASAP project last year because of the size of it, which was -- which is very well matched with the excess cash we have on the balance sheet and the profitability of that project. And so we're very focused on that. And what I would say that given the delays in the approval, which I'll get to in a second, we, 3, 6 months ago, really started to, call it, diversify our development opportunities in some existing jurisdictions as well as some new ones. So -- and I think we're going to start to see the fruits of that very shortly.

In terms of the actual ASAP program, the -- we received approval back in August for -- from the Energy Bureau and then moved to PREPA, which is the actual contracting agent. It turns out that in Q4, they did -- the Board was basically not properly constituted to approve it. It is now properly constituted. They do now have a quorum. And our understanding is that the meeting or basically the first board meeting of PREPA with properly constituted call it quorum will be taking place within the week. And we do know that our ASAP project is on the docket for such board meeting amongst other projects. So we're not the only one, there's numerous projects that they need to get to, given that there's, I would say, been a pause in terms of their approval of projects.

So we are expecting that board meeting to happen in the short term now that they have the quorum. And then -- so in addition to that, we do have nonbinding LOI that we signed regarding the acquisition of the small solar project in one of our current jurisdictions. It's not big, but it's strategic. And we would look to be going binding on that by the end of March. So that's on the acquisition front.

In terms of other development activities, we are participating in an RFP process in Puerto Rico as well that came out in the end Q4. There was a request for qualifications in December, which we successfully passed, and we're now in the RFP process. We're going to be submitting a solar plus BESS with a heavy BESS weighting to it, so it's more dispatchable. And interestingly, despite the PREPA, which has been delayed, I would say that the process in this RFP is moving very quickly. The timeline is very aggressive and any sort of correspondence, I would say, responded to very quickly.

So -- and the actual formal timeline that they have published is that they're looking to have contracts signed by June. We actually had to submit or comment on contracts yesterday. So that is actually moving. So we're very interested in that in Puerto Rico.

Also in the same area, I would say that while the Dominican is having issues with curtailment, we do think that opportunities centered around storage will emerge from it, and we will be looking at being, call it, ready for that, and there are things that we're working on there. And then in terms of importantly, in other markets, big focus going forward now is Mexico for us. We, yesterday signed an exclusivity agreement with a local developer there for -- which gives us access to approximately 1,000 megawatts of projects. The way that -- so we're very happy about that.

The way that things are working in Mexico is there's different processes that are going to be happening throughout the year. The first one is something called mixed projects, which is -- we were actually invited given the work that we've done last year, so Polaris was invited to participate in, it's called the convocatoria. It's basically a process to -- for them to some fast-track projects/signing of contracts. But the short-term one, which is we actually have to submit by next Friday. It's for what they call mixed projects, which is where your, I would call it, basically their build-own-operate transfer, 25-year build, own, operate transfer projects with CFE which is -- and they're going to be your contracting entity.

So we will -- with this portfolio that we've call it, have exclusive rights to, we will definitely be submitting some of those projects in that portfolio for this short-term mix projects, convocatoria by next Friday. And then still short term, but a little bit later, call it Q2 this year, there's going to be a second process, which will be for more traditional, private company long-term PPAs where they're not build. So that's expected to be happening in April, May of this year. And so the plan would be to submit more projects from this portfolio into that as well as likely some other ones that based on conversations with other local developers that are quite interested in partnering with us for that.

So -- and then beyond that, which I would say is more, call it, a medium term is that those are the two most short-term processes, but that doesn't -- that's not going to be the end of it. We don't -- there's going to be more abilities to contract either directly with CFE or with other. There's numerous sort of approved purchasers of power there on a wholesale basis. And so that's -- we think that, that can be back half of the year or sort of early next year in terms of actual contracting. So there's going to be a lot happening on the development side this year in Mexico.

In addition, another opportunity that is there that we're looking at is behind the meter. Given the regulation changes as well as the pent-up demand from industrial consumers there. So we do have several acquisitions we're looking at and projects we're looking at that are behind the meter. And there behind the meter can be up to 20 megawatts. So you can get some scale in behind-the-meter projects now in Mexico. So I would say with Mexico, with the, call it, RFP in Puerto Rico and with ASAP, I would say we are now sitting here with a lot more, call it, development shots on the net than we had 3 months ago, and I would anticipate being able to having -- taking a reasonable success rate.

Obviously, we're not going to advance all of those, but that we should be having news in the next 3 to 6 months with defining actual projects that were going to be, call it -- starting to build this year and next year and the following year so that the connecting the dots on the 5-year plan will be much clearer in the next 3 to 6 months.

So that's it for the formal remarks. We can open up for questions.

[Operator Instructions] Our first question is coming from Melissa Dean with National Bank Capital Markets.

Just firstly, I wanted to ask you guys about your M&A pipeline. You mentioned a couple of opportunities in your prepared remarks. Could you just walk us through the pipeline you're seeing in Latin America? And what kind of valuation multiples and IRR you're seeing if anything has changed since the last time we spoke? And then you also mentioned in your prepared remarks a nonbinding LOI that you signed. If you could provide more detail there as well, that would be great?

Yes. Just on that one, given it's not [indiscernible] haven't press released, but it's not a large project. It's -- but it's really strategic in terms of it's essentially colocated with one of our other solar projects. So I think there's a high degree or likelihood we convert that to a mining deal, but it's -- just think of it as about 10 megawatts. So it's not huge, but we quite like the economics. And it's -- there's just synergies there. So it's -- we think it's a good transaction.

In terms of the overall pipeline, I would say in terms of multiple things we're generally looking at, it is a range. I would say it's maybe at 6.5 to 7 on the low end, 8.5 to 9 on the high end. But it's -- I don't -- I wouldn't say that it's really increased in terms of our pipeline. And partly, that's just because we are in several processes, but we've seen a lot more of what I would call mid- to late-stage development, which are technically acquisitions, but they're really just us coming in and taking over that's really, really increased.

And when we look at those, when you -- whether it's batteries or solar or the combination of the two, the construction risk and the construction timeline being, call it, we think the risk is relatively low. The timelines are relatively low, that you're all in sort of multiple on those is just significantly lower than what we're seeing on the acquisition side that the gap doesn't justify really going for these acquisitions. It justifies going for, call it, the shovel-ready or 6 months shovel-ready type projects, which is what we're seeing in, for sure, Puerto Rico, a couple of the other markets and for sure Mexico now.

So I would say that -- we want people to think there's a ton of M&A activity for this year. I think it's going to be much more on the late-stage development activity.

Okay. So you're seeing a stronger skew of potential for, I guess, in development assets than operating or better returns, I guess, right now at this point?

Yes. And part of that, too, is I would say there's been a real push by offtakers in all the jurisdictions we're seeing where there's activity to -- that are forcing developers to basically partner with people with a balance sheet, track record and ability to put LCs or guarantees prior to getting contracts. So the developers can't go all the way to having a PPA in hand and then selling it to the top bidder. It's just not possible anymore. So they're being forced to basically to come sooner, which is making the economics more attractive for, call it, companies like ourselves that do have access to capital.

Okay. Perfect. That's very helpful. And just on the Mexico opportunity that you mentioned, you said, I think, some 1,000 megawatts of project availability, signed an exclusivity agreement. Can you talk about the PPA structures you're seeing in the Mexico market in terms of contract duration? And what kind of IRR opportunities you're seeing there as well?

Yes. So the duration are, I'd say, low end 15, but 20 to 25 would -- is typical. So good duration. But the way that you are required to have 3 hour -- sorry, 30% coverage with storage for 3 hours, so not 4, which is interesting. But so as long as you have that, you can get capacity. So it's not just -- they're not just energy PPAs. They're sort of energy plus capacity. So -- and I would say that the economics sort of breakdown that it's, call it, set approximately 70% is your energy and 30% is your capacity, but they're both -- you're actually getting contracted for the capacity for the life of it. You are not having to -- it's not as if you get a contracted energy price and then you're going spot on the capacity.

If you're getting that, you're getting both for the life of the contract. In terms of IRRs, I would say, for the cleanest sort of CFE, highest credit quality, you are going to be in the 12% to 14% and then IRR and then others, we're seeing -- bring that 13% to 16%. So I'd still say your -- it's mid-teens, maybe 14% is the right number. But strategically for the company, I think what we're really trying to do. So it's not as high as what we see, for instance, Puerto Rico or, call it, Dominican or call it Caribbean. But we do think that bringing on those megawatts is much more, call it, predictable in terms of timeline.

It's much bigger in the market, so we don't need a huge win, it's a very small market share that we need to be, call it, material for Polaris. But so the combination, I would say, of, call it, megawatts coming from that market in Mexico on a much more, call it, bankable basis with a much higher impact returns from the Caribbean is the combination we're looking for. Now a lot of that realistically, though, in Mexico is not going to be shovel ready until, call it, Q4 or Q1 of next year. So the timing of it is important, too, which is we get the ASAP, and that's going to become this year's big CapEx project, but then we will have something, I would say, in Mexico on the backs of that, but more for next year.

Okay. Understood. And just for the Mexico projects, the construction timeline, I believe, for SO1 and Puerto Rico was 12 months or less. Are you seeing similar construction timelines for Mexico? Or do they differ quite materially?

No, I would say 12, 15 months, similar, very similar.

Our next question is coming from Nicholas Boychuk with ATB Cormark.

Just coming back to the PR. I'm wondering if you can kind of expand a little bit more on that curtailment issue, specifically how much it might impact this year, if there's anything you can do about it? And I know you mentioned that they are looking to do battery energy storage, but it feels like that absolutely has to happen here. And I'm curious what signals you're getting from the regulators in the Dominican as to the size and urgency of needing battery energy storage on their grid?

Yes. So we were about 6,000 megawatt hours last year. It's hard to gauge exactly where it's going to land this year. I think that's a reasonable number. I think our budget to be conservative as we assume sort of 10,000 for this year and then we think it will drop because we do -- we know that they are taking the storage seriously. I don't want to sort of really promise anything on sort of us doing more storage there, though, but we're -- you know that we're going to try to be in the mix. What I can say is that the -- we do know they're taking it very seriously. And we -- based on what we have heard from them and what we're seeing them do is that they would agree with our assessment, which is the best way sort of forward here is to have numerous sites, call it, storages transmission is to absorb that energy in the middle of the day.

I mean they have very expensive cost energy and need at night, so it's not as if they're awash in energy from 6 to 10 p.m., they need it. It's that they just don't [ need ] much during the day. So I don't think there's any disagreement now in terms of the way forward. It's just -- it's going to be hard to [indiscernible] exactly what we can do there. So I think short term, call it more curtailment this year, but I do think they'll get their act together, such that next year, they will have resolved the situation at some point next year in terms of the actual curtailment. We're going see what we can do. We'll see what we can do in terms of -- and I think if we can do that, as long as they do that, I think it is a market you still want to participate in, in some form or fashion, yes.

Understood. You mentioned there's a couple of new relationships with local developers, and it sounds like the activity in that sphere is really picking up. I'm curious if you can expand a little bit on the drivers behind that. Is it -- is it as much the lack of capital in the local market where you guys need to partner with someone like yourself? You mentioned that, but I'm curious if there's also a bit of a nationalization in energy sovereignty and these regulators are pushing more of this in their market to decouple from things like fossil fuels? And I guess the whole point of the question is trying to figure out, is this the earliest innings of a push like this? And are we going to see a lot more activity in the coming 6, 12 18 months?

So this -- so in terms of actual -- I would say that the dynamic that I was mentioning of developers are being sort of forced to talk to companies like us earlier. I would say we're seeing that in every market that we're in. And that's just I think that the driving factor is more the -- whichever the government entity is that's running a process or that the contracting entity I think have had experiences where they're just [indiscernible] a lot of developers that couldn't get a project to the finish line.

And so that just seems to be a threat in all these markets. So it's not specific to anyone. So I think that's the reason why it's happening. And I think we're just in a nice position there with cash on the balance sheet and operating track record in the region that we tick the boxes. And so it was literally just -- we started looking at projects presence in Mexico last January quietly and met with a bunch of the different government entities. And it was only because of that, that we actually got invited to participate.

So we didn't even actually have -- when we got the invitation to participate, we didn't have a specific project. We have specific projects now that we're going to be submitting, but we got invited to participate just because of our CV, call it. But no sort of small developers without an operating experience were invited. I don't know if I'm answering because I think there were several questions in your question, so you ask away if I didn't answer them all.

I guess the only other thing is if you're hearing anything about energy sovereignty and the decoupling of fossil fuels?

Energy, what? I missed that word, Nick.

Energy sovereignty, like just making sure that these grids are not in any way tied to external markets like the U.S. supply and fossil fuels and natural gas and diesel.

No, I wouldn't -- I'm not hearing that. I think they do want to be self sufficient. I think unfortunately, it started -- on that issue, Nick, I'd say it's almost different for every different market we're looking at. So for instance, obviously, Puerto Rico is part of the United States. So it's got its own -- it's got its own character. Mexico, I would actually say as being a Canadian company is quite helpful there. And DR, I would say it hasn't -- where -- there it has much more to do with, call it, the too much energy in the day, i.e., curtailment issue is absolutely the driving factor. So I would say there's no common thread on that front in the different markets that we're in.

Makes sense. And then last for me, just on timing and magnitude of CapEx. So if ASAP goes through with this now being quorum board, when do you think that would turn on? And how are you thinking about overall capital availability for that, potentially battery energy storage in the Dominican, these other RFPs in Puerto Rico, your 1,000 megawatts in Mexico, puts a lot of irons in the fire. How are you feeling about the balance sheet?

Yes. So I would also say that we've moved a bit to last year was we had one -- like we had other irons in the fire, as you know, but it was -- we really were focused on the ASAP. So we are -- I'm much more -- we're more on the -- have many more irons in the fire and then to get the optionality for us. I would also say that I am relatively confident that with our cash position, but also still a conservative balance sheet that our ability to raise, I would say, fixed income capital to top up there, is quite significant and at rates that are better than what we did before.

And that can really -- and those rates can work in all of these markets we're looking at in terms of the growth opportunities. So we want a lot more irons in fire and I think we can fund what we're looking at. And so the theories of let's get to the point where we have call it, too much to do, and then we have to start paring back and choosing. But I would say this year, it's still most likely, call it, the tiny acquisition, ASAP. And then call it, announcements and dotting the Is, crossing the Ts on CapEx programs that are realistically going to start maybe Q4, but I'd say more likely start in Q1, Q2, Q3 next year for projects that are coming online.

So if you call it ASAP is coming online Q1, Q2 next year, the rest of it is, call it, 12 months behind that and I would say 12 and 24 months behind that. So you're going to see sort of some clarity on what '27 is going to look like. The CapEx this year for '27, cash flow, but also then having a line of sight on realistically CapEx for '27 and '28 for revenue, cash flow in '28, '29. And everything we're seeing at least that we're working on is such that it's all, I would say, chunky enough that they call it the numbers that we have in our presentation for where it'd be in 2029, we're definitely -- they're big enough to get there.

And one add I would say is that I wouldn't say this, say, for Puerto Rico or Dominican, but what I would say for Mexico is if there's too much. I don't think there's going to be, I think we need to assume there's a certain hit rate, right? But if there was, I would say there's a lot of local capital there that is very interested in participating alongside companies like ours. So I do think that there's possibly -- it's early days, but I do think there's a possibility that you have -- we don't need to be 100% of the local sort of SPV. If there's a lot of megawatts there, I think we can find relatively attractively priced capital, both on the debt and equity side there.

As we have no further questions on the lines at this time, this will conclude today's Q&A session and today's conference. You may disconnect your lines at this time, and have a wonderful day, and we thank you for your participation.

Thank you.

Thank you.

Greetings. Welcome to the Polaris Renewable Energy Third Quarter 2025 Conference Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the conference over to your host, Alba Ballesteros, CFO at Polaris Renewable Energy. You may begin.

Thanks, Hallie. Good morning, everyone, and welcome to the 2025 Third Quarter Earnings Call for Polaris Renewable Energy, Inc. 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.

I 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, are subject to a number of risks and uncertainties that could cause actual results to differ materially from current expectations. These risks and uncertainties include the factors discussed in the company's annual information form for the year ended December 31, 2024.

At this time, I will walk through our financial highlights. Overall, Q3 2025 was a steady quarter for Polaris. Results reflected solid operational execution, disciplined cost management and the second full quarter of contribution from our Puerto Rican wind operations. Together, these factors supported both year-over-year and year-to-date growth in generation, revenue and also adjusted EBITDA, despite production generally being lower in the third quarter of the year, which coincides with the dry season in those countries where the company has hydroelectric plants, and therefore, there is less resource available for energy generation, as is the case of Peru and Ecuador, as well as the rainy or hurricane season, and therefore, we have less radiation or wind in those countries where the company operates solar plants as it is the case of Dominican Republic and Panama and our wind farm in Puerto Rico.

So starting with operations. Third quarter consolidated energy production totaled 181,235 megawatts hour versus 168,639 megawatts hour for the same period last year. Consolidated energy production for the 9 months ended September 30 totaled 613,524 megawatts hour, representing an 8% increase as compared to the same period last year. The strongest performance this quarter was achieved by our hydroelectric project in Peru, where favorable hydrology during what is typically the dry season and an excellent plant availability led to a 44% increase, both in Q3 2025 and year-to-date in hydro output for the Peruvian projects.

Our hydroelectric facility in Ecuador also had an exceptional quarter, producing 24% more energy in the 3 months ended September 30 versus the 2024 comparative period, thanks to strong rainfall and an excellent technical performance.

In Puerto Rico, the Punta Lima wind farm acquired in March added incremental production that did not exist in 2024, and is now fully integrated in our portfolio. In Panama, solar generation in the quarter was 2% higher than in the 2024 comparative period. These increases offset lower output from Nicaragua, where short-term well instability and natural steam field decline earlier in the quarter reduced generation by about 5% for the 9 months ended September 30 versus same comparative period in 2024.

Production at our Dominican Republic Canoa 1 Solar Facility decreased 1% in the quarter when compared to the same period in 2024. While year-to-date, the production increased 5% versus the 2024 comparative period, reflecting efficiency gains from the new panels installed in 2024, which allow offsetting grid-wide curtailments.

Overall, our diversified portfolio spanning geothermal, hydro, solar and wind across 6 jurisdictions continues to provide balance and resilience in the face of localized resource variability.

So turning to the financial results, starting with revenue. Revenue was $19 million during the 3 months ended September 30, which represents an increase of 8% versus Q3 in 2024. Revenue year-to-date was $60.9 million versus $56.9 million in the 2024 comparative period, reflecting higher generation in Peru and Ecuador, as we have mentioned, and the addition of our project in Puerto Rico, the Punta Lima wind farm.

Adjusted EBITDA, adjusted EBITDA of $12.8 million for the quarter compared to $12.4 million for the same period last year. And furthermore, for the 9 months ended September 30, the company realized $43.2 million in adjusted EBITDA compared to $41.4 million in the same period last year, reflecting a 4% increase.

Operating margins remained strong despite inflationary pressures and the integration of new assets, supported by disciplined cost control and lower insurance expenses following our debt repayment.

Cash generation, net cash from operating activities remained robust, with $29.2 million for the 9 months ended September 30, exceeding the same period in 2024 by $3.3 million. The increase mainly reflects the collection in Q3 2025 of the strong Puerto Rican revenues from Q2, which follow a 47-day collection cycle, and the shift from quarterly interest payments from regional loans in 2024 to semiannual bond interest payments in 2025.

Net cash used in investing activities for the 9 months reflects the initial $15 million payment for the acquisition of Punta Lima wind farm, while there was no comparative transaction in 2024. Net cash used in financing activities for the 9 months mainly reflects the early debt repayment of 4 credit facilities totaling $120.6 million.

Dividend. Finally, we remain committed to delivering shareholder returns. I would like to highlight that we have already announced that we will be paying a quarterly dividend on November 21 of $0.15 per share to shareholders of record on November 10.

With that, I will turn the call over to Marc, who will elaborate on Polaris' third quarter results as well as on current business matters. Thank you.

Thanks, Alba. I'll just take a few, call it, operational comments about where we see sort of the rest of the year looking forward. As Alba mentioned, the hydros were stronger than normal in Q3, which is the dry season in those jurisdictions. But we -- and we do see that, at least October to date, continuing. So hydros, we think, will be somewhat stronger than usual in Q4 here as the rainy season has started somewhat earlier than normal. I would say, what's going to offset that a little bit is that those call it, rainier conditions do seem to be also in the solar jurisdictions, DR and Panama. So they're looking maybe a little bit softer. But I would say, the net effect of those 2 things should still be positive in this current quarter.

I see San Jacinto, as I mentioned the last quarter, in the 49 to 51 range, which it did. And then I would just -- I'm saying 50 megawatts current quarter, plus or minus a little bit similar. So that -- when I run our numbers, that would bring the quarter in around 195 to 200 gigawatt hours, it would be the current range that we're looking at right now. And just a reminder that -- and that is because we have moved the major maintenance at San Jacinto into January of next year instead of December of this year, just based on some availability of Fuji staff. So that will land in Q1 next year.

In terms of really the growth and the developments, the big focus remains ASAP. The update on that is that the contract was submitted by ourselves in LUMA to PREB, which is the Energy Board, a while ago. It was approved by them, and then it went to PREPA. And just to explain -- I'll give a little bit more detail. There's 3 entities that need to approve it there, which is PREB, which is the Energy Bureau, then PREPA, which is the contracting agent. And then after that, FOMB, which is the Oversight Management Board.

Basically, we had received PREB. We have PREB approval as of this past Monday, and I would highlight that on September 22, the governor issued an executive order, which was really focused on the energy, call it, emergency situation. It's an acute need for more energy on the island. And in that order, it was really, I would say, directing government entities, whether it's PREB, PREPA or even Ministry of Environment, to expedite approval processes and permitting processes, such that new generation and including storage can get brought on the system quicker than what has traditionally happened in the past. So we are -- while it did take a bit longer than we expected to get this PREB approval, we are expecting things to move reasonably quickly from here on out.

What does that mean, though, in terms of -- we would look at likely a Q4 in-service date next year for that. And in terms of the sizing, it has landed on 71.4 megawatts, which was approved as opposed to 80, and that's really just a technical limitation at the interconnect point. So those metrics, based on what we're seeing from the procurement, and we are, I would say, reasonably far along in the procurement process, it would be gross CapEx of about $70 million. But we do still anticipate being able to achieve an ITC on that, and which would bring the CapEx down to a net CapEx of about $50 million. And at that size of 71.4, you'd be looking at EBITDA around the $13 million to $14 million on net CapEx of $50 million, which is about a 3.5 to 4x sort of CapEx divided by EBITDA build multiple. So still very excited about those numbers and hoping to launch the program in this quarter and the next month.

We're also hopeful that this won't be the only storage project in Puerto Rico that we do. We've already been asked by LUMA to formally give our intention to move forward with something called SO2, so we're looking at that. And I would also say, given what I mentioned with the executive order, we are talking to several developers on the island -- or with projects on the island for more traditional solar plus storage projects that have contracts or have been awarded approvals for contracts, but they're looking for sort of larger financial partners or operational companies, and this has really come on the radar screen just in the last, I would say, 2 to 3 months.

We like these because of what we're looking at on the island as well as they're reasonably chunky. I would say the small ones are $5 million of EBITDA, but we're seeing things in the $10 million to $20 million range. So but with very good, I would say, capital ratios, probably not quite as good as the ASAP program I mentioned, but in the, call it, 5x, which we're still looking at 20-year USD contract. So that's very good return profiles. So that really is, call it, the brownfield focus right now. And I would say that is the focus for the company.

I would mention the DR, which we have continued to push on more in the background. It looks like that will get pushed into next year in terms of potential contracting as the government is now saying that they want to look at doing a tender situation instead of bilateral. We would obviously have the ability to participate in that. And I think we'd be in a good shape for that, but we do need to wait likely 'till next year. So what that means is really pushing the Puerto Rico projects in front of that.

Balance sheet is strong with $99 million of cash. We did repurchase another 27,000 shares in the quarter in Q3 and continue to in Q4 here. So I guess the -- it is somewhat slower coming with the ASAP project, but we're very confident it is coming. And with these other projects that we're looking at, I do see a situation quite quickly here where we will be using up that spare capacity on the balance sheet that we have and hopefully then some.

So really, I would say, over the next 12, 15 months here, the story would be steady as she goes from an operating perspective, but a big and expected big pickup in what I call development and construction activities and news flow. And I would say, as we as we move forward on ASAP and as we move forward with hopefully 1 or 2 other projects next year, and we will, for sure, I would say, be giving more market updates and press releases as we move forward with these projects. So it will be more sort of -- call it, newsy on the development and construction activities next year. And I think it's important because those will be very material for the company. And then, call it, financial results on the back of those coming in 2027 and 2028.

So with that, we can open up for questions.

[Operator Instructions] Your first question for today is from Baltej Sidhu with National Bank of Canada.

Could you -- it's great to see the progress with SO1, but could you just remind us of, one, the comparability of SO1 and SO2 as it pertains to the attractiveness for Polaris that you -- with the infrastructure you may have to leverage with the implication of SO1 that would be in place?

So the technical difference on the island is just SO1 was only for people that have a current operating interconnect agreement in place. And in other words, you had to have some generation facility with an interconnect. SO2 is really open to either the same group, which is some people that have an interconnect or anybody that just has a new development. So you have a new project without an interconnect, you could then participate. So it's really the same terms for us. The only difference is we need to up our transformer capacity, but on a, call it a $60 million, $70 million project, that's only a $2 million or $3 million CapEx item for us. So it's essentially the same type of economics.

And the transmission capacity would be there that you would have, right?

Yes, the transmission capacity on the sort of downstream on the line is about 130, 140 megawatts, and we're sort of -- the first ones really 35.7x2, that's a 71. So we have a fair amount of -- we could probably triple it from here.

Great. Great. And then might be too early, but is there any impact to pricing that we could see you relative on SO2 versus SO1? For PPA, sorry.

Well I think pricing might be higher because the way that they do things on the island, typically for a traditional solar, let's say, is that any interconnect costs and system upgrades that are needed for new project rather than the transmission company or the distribution company paying for that and charging it to the rate base, the developer actually has to finance that. And so it comes into the cost of the PPA, let's say.

So for SO2, though, the assumption is that there will be participants that don't have an interconnect yet. So they will have to finance and build that. And so compared to SO1 with existing interconnects. So if anything, the price should be somewhat higher. I don't think it would be -- well, it could be instead of 16,000 megawatt per month, [ 18 to 20 ]. We don't know that yet. I don't think they've landed on it, but I think if anything, it would have to be somewhat higher. And the good news there is the backdrop of still, I'd say, very competitive activities in the actual -- the lithium battery cost curve, that's probably going to continue, right? So still to be determined, I would say, the worst case scenario is it would be the same type of economics.

Very interesting. And then looking forward to hearing those organic updates over the course of next year. And just switching over to, as you noted, the capacity that you have on the balance sheet and the ability to leverage that for organic development. How are you thinking about the inorganic growth and the M&A side? Could you point towards any color that you see on the M&A pipeline and/or valuations in the regions in which you operate?

Yes. And then just to be clear, when I said we're talking to the local developers with brownfield, I wouldn't put that in the M&A bucket, even though it's kind of in between. I would put that still more in the brownfield development side.

But in terms of M&A, which I would also just suggest is probably a little bit comes on the back of us actually, I think, putting some runs on the board in terms of ASAP and probably some other development projects, I would say. But multiples, I would say, came down more like 6, 12 months ago to, I think, a reasonably attractive level. I think they've kind of leveled off there.

So if I had to put super high-level numbers on things, I would just say if you -- let's say, you take ASAP at 4. Let's say, you take 4x, I'm talking -- this is a build multiple. Probably these other development projects we're looking at are [ 5, 5.5 ], same as the DR. I've seen sort of more actual operational with contracts, running assets in the M&A side in the jurisdictions we're in, anywhere from 6.5x to 8x.

Your next question is from Nick Boychuk with Cormark Securities.

In Puerto Rico, can you comment a little bit on the competitive dynamics? So you mentioned that there's these local developers with brownfield opportunities. How many other players in the space could potentially be having these conversations to develop these? And I guess, once you have that conversation, how fast do we then move through permitting, construction and getting these things operational?

Yes. I don't know, obviously, with 100% certainty, who else is out there, but it definitely seems like there's the dynamic of you have a few big players on the island with operating assets that wouldn't be interested in the stuff we're looking at. And you have a lot of, I would say, call it, local developers that don't have the financial capacity. For people in the middle that are looking at, I would say, again, projects that once they're up and running have from $5 million to $20 million of EBITDA. We do know of one player that was definitely there and in the game, but they are not anymore. So it does seem like it's really opened up for us from that perspective.

Okay. Understood. And would it be a similar dynamic in the Dominican? I appreciate that it's been pushed back a little bit by a year, but could you theoretically also have similar activity in that country?

Yes. I would say, I think interestingly, the DR might be a little bit more competitive for us in the midrange than Puerto Rico. So the flip of that is that Puerto Rico does seem to be quite open right now. And I think it's a weird -- the Dominican, you actually -- a bunch of, call it, credit is available because it's a "developing country." So you have a whole bunch of lenders that would maybe fund a smaller developer to get a project off the ground. That doesn't exist in Puerto Rico because it's part of the United States.

So that -- it's almost more of a capital issue in Puerto Rico as opposed to how many competitors are there, if you understand what I'm trying to get to, like Puerto Rico, it's just -- there's a big issue with getting capital for these small developers to get a $50 million, $100 million project off the ground, whereas there's a little bit more availability in the DR for that, even though I would say it's not as if there's a bunch of other competitors that are a similar size to us in that market. It's just that the option of them to maybe get it further along to get construction going. There's a little bit of a better chance in the Dominican, which is a little counterintuitive, but that's what we see.

Okay. Got it. And then I appreciate that the return profiles on the M&A. You said it was 6.5x to 8x versus the [ 5 to 5.5 ] for something that you'd be building brownfield. So better returns if you do brownfield. But just cognizant of your internal resources, your own abilities internally to develop these things simultaneously in given time. Is there a point where you recognize you could leverage more of your balance sheet and acquire something now, add incremental EBITDA and have a meaningful impact on shareholder value in the near term versus trying to maximize the return profile? How are you thinking about the difference between time to getting these built and maximizing the near-term shareholder value?

Good question. I would say, believe it or not, the -- call it, the senior management time to do, let's just say, real due diligence on operating assets, legal side of things, operational side of things on the front end, maybe not the back end. Once the operations are there, I would say, streamlining them into yours isn't a huge deal. There's always issue, but it's not a huge deal for us. I would say, at the front end.

So to your point, where there's going to be a bottleneck would be more that we are doing, call it, the late-stage development on ASAP ourselves, right? If we partner with some developers, we're going to be doing -- we're going to be heavily involved in that late-stage development/construction and procurement, which I think is very similar to the M&A side of things.

So it might seem it's easier. But I'd say, it's at the front end where there's a potential bottleneck. And we could -- but we can, for sure, do 2. It might get a little bit harder at 3, but believe it or not, like I think we could do all -- like we can for sure do 3, like we could do ASAP, we could do a development, a new development in Puerto Rico now also because we're there. It's not as if it's a new jurisdiction for us. So we -- our conversations with the authorities on some of these other projects that are right after we've talked to with ASAP. So I do think we can handle that. It would be different if it is a new jurisdiction. And some of the M&A stuff, I think at the front end, we could do it as well. So I don't think it's necessarily an either/or.

Okay. So just to confirm my understanding, you could do ASAP one, develop something else in Puerto Rico and then one or the other of a DR or M&A type project? So theoretically, 3 different things on the go at the same time, call it, $10 million to $15 million in EBITDA for each and all of that could potentially be wrapped up by 2028?

Yes. I think that the -- in our presentation, we sort of show a 5 year, but it's just safe to 2029, that EBITDA by [ $100 million, $100 million plus ]. What we're looking at right now is I think we could, let's just say we're flat for the next 12 months operationally, but we will be doing things since that '28 number, I think, can get very close to that. It's a big step up. So the '28 number is looking very close to the '29 number that we have in the presentation.

Your next question for today is from Theo Genzebu with Raymond James.

Just a couple of quick questions. So just on the curtailments at Canoa 1 and the expected curtailment now at Canoa 1, the delay of the interconnection for Canoa 2. I guess, is there like -- how are you engaging like with the government to address the -- to address these? Is there anything that can be done on, I guess, by talking to the government there?

Yes. I think I'd say a fair amount of conversation where it just always goes to is that, yes, we're going to -- we need storage. So they very much acknowledge that. And so this is my comment about they're likely -- as opposed to doing a bilateral negotiations, which we were looking to do, which was going to be put panels, but also put a reasonable storage capacity there such that you're switching, call it, a problem challenge into at least an opportunity or at least you hedge yourself off with the storage. And so they see that, but they don't -- they acknowledge it. They're just -- they want to get the regulation set and they're likely to do a tender next year, and that's really how they're planning on dealing with it.

Got you. And then I guess it's safe to say that it doesn't really impact like, I guess, how you guys think about future development in the Dominican?

Well, I think what it does do is it -- I've probably bumped up the percentage of storage coverage that I think we need, from maybe 25% to 40%. But I think that -- yes, I think it's a "problem" now, but I think it will end up morphing into an opportunity when they're ready, and I think that will be next year at some point.

Okay. Great. And then I guess just one more for me. And just on the regulatory time line of Puerto Rico for this ASAP storage program. I understand, you expect the approvals within the next 60 days. Just in your opinion, is there any possibility of further delays to that? Or it's pretty much we expect?

Yes. Well, I can't say no to that. I mean, I think that the -- this island is known to have very good projects, but we need to play the patience game, so I think it's possible. But I would say with this September 22 executive order by the governor, the entities do seem to be very responsive right now. So it's probably as good as we can expect in terms of that time line for Puerto Rico.

We have reached the end of the question-and-answer session and conference call. You may disconnect your lines at this time. Thank you for your participation.

Thank you.

Thank you, everyone.