Good day, everyone, and welcome to the Polaris Renewable Energy Inc. Third Quarter 2026 Conference Call. At this time, all participants are placed on a listen-only mode, and we will open the floor for your questions and comments after the presentation. It is now my pleasure to hand the floor over to your host, Alba Seisdedos. Ma'am, the floor is yours.
Thank you, Matthew. Good morning, everyone, and thank you for joining us for Polaris Renewable Energy Inc. Third Quarter 2026 Earnings Call. Before we begin, I 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 at our corporate website at polarisrei.com. Unless otherwise noted, all amounts referred to are denominated in USD. 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 reflect current expectations and are subject to risk and uncertainties that could cause actual results to differ materially. This includes the factors discussed in our annual information form for the year ended December 31, 2025.
On today's call, I'll start with an overview of our third quarter and year-to-date operating and financial performance. Marc will then discuss recent business developments and our growth initiatives before we open the line for questions. Beginning with production, overall, our portfolio performed broadly in line with management expectations during the third quarter, despite some operational challenges and resource variability across our facilities. Consolidated generation for the quarter was approximately 176 GWh, 3% below the same period last year. On a year-to-date basis, production was 580 GWh, representing a 5% decrease compared to the first nine months of 2025. The lower production primarily reflected continued curtailment in the Dominican Republic and some operational constraints in Nicaragua. These impacts were partially offset by exceptionally strong wind generation in Puerto Rico. Looking at the portfolio in more detail, Nicaragua performed broadly as expected during the quarter.
Our geothermal production remained in line with management expectations, although year-to-date generation continues to reflect the impact of major maintenance performed earlier this year and lower output from the binary unit due to reinjection capacity constraints. In Peru, production remained in line with our expectations. During the quarter, we also continued to benefit from higher contracted PPA prices following the inflation adjustments implemented in May. In the Dominican Republic, curtailment continued to impact production, although we saw a meaningful improvement during the quarter. Curtailment averaged approximately 18% in Q3 compared to 35% in the first half of the year. Year-to-date curtailment averaged approximately 28%, still significantly above historical levels of around 7%. We continue to engage with the relevant authorities and other renewable energy producers to support longer-term solutions to these system-wide constraints.
Puerto Rico delivered a particularly strong quarter, with wind generation increasing by approximately 52% year-over-year, reflecting exceptionally favorable wind conditions. This strong performance helped offset lower production across the other parts of the portfolio. In Ecuador, production was lower than last year, reflecting more normalized hydrological conditions, while Panama continued to deliver solid performance, supported by good solar resources and plant availability. Overall, while consolidated production was slightly below last year, the results continue to demonstrate the benefits of our diversified portfolio across technologies and geographies. Turning to our financial results, revenue remained broadly flat year-over-year at $19 million for the quarter, despite the 3% decrease in consolidated production. This primarily reflects high PPA prices in Peru and a favorable generation mix with increased production in Puerto Rico, where contracted energy prices are higher than those on the facilities experiencing lower generation.
Adjusted EBITDA for the quarter was $12.3 million compared to $12.7 million in the same period last year, representing a decrease of 3%. Regarding net earnings, we recorded a net loss attributable to shareholders of $7.2 million compared to a net loss of $0.3 million in Q3 last year. The loss was primarily driven by a non-cash impairment of $8.3 million related to our asset in the Dominican Republic. During the quarter, development constraints affecting the Canoa 2 expansion project, together with the continued curtailment affecting Canoa 1, triggered an impairment assessment of this asset in the Dominican Republic. Important to note is that this is not a cash accounting charge and does not affect our liquidity or operating cash flows. Excluding this impairment, our underlying operating performance remained broadly consistent with the prior year quarter.
From a cash flow and balance sheet perspective, we continue to maintain a strong financial position. During the quarter, operating cash flows benefited from higher cash collections in Peru, reflecting elevated spot prices and partially offset by higher development expenditures. We ended the quarter with approximately $99 million in total cash compared to $93 million at the end of 2025. Finally, we remain committed to returning capital to shareholders. We have declared a quarterly dividend of $0.15 per share payable on November 20th to shareholders of record as of November 12th. Overall, despite lower production in certain markets and the non-cash impairment recognized during the quarter, our underlying operating and financial performance remain resilient, and we continue to be well-positioned to advance our growth strategy. With that, I'll turn the call over to Marc.
All right. Thank you, Alba. Yeah, I will just focus on the go forward. As people know, and we did talk about this in Q2, but we signed the ASAP contract on June 12th, and then more recently, a few weeks back, we announced the equipment purchase order for the batteries, which we're happy about. In that contract, it contemplates delivery starting in March, April of 2027. With that, we would have a target commissioning date of Q3 of next year, and we will provide updates on that as we move forward with construction and commissioning activities. The next big one for us is Mexico. We've already announced three project awards in Mexico. This is becoming a really big growth driver for us going forward. Those three projects are 250 MW in total, plus battery storage.
We have signed the JV agreements, we signed the fideicomiso, and now we are finishing the permitting to get the projects into ready-to-build state. We do expect that the PPAs will be signed shortly. We would expect for the small one, which is called Don Humberto, the 25 MW one, we would expect that to be signed in December. For the other two projects, we would expect PPAs to be signed in January. We think those are further milestones in the short term to move the projects forward. Start of construction would be shortly thereafter. We see Don Humberto, call it, small works this December, but in earnest starting in Q1, and then the other two similar, but I would say really in earnest starting in Q2 next year, the construction. As per expectations, as per the presentation that we have online.
Excited to get going on those. Those were awards in something called Mixtos 1, and we are involved in Mixtos 2, which we are It is not a bid, but it is essentially, if you think of it as a bid process, we have several projects in there, and we are optimistic that we will receive several more awards, and we expect to have clarity by the end of November. Which is obviously soon, and that will give us a really good idea as to what the next two, three years in Mexico will be, and we would expect that with the 250 MW on Mixtos 1 and a significant number on Mixtos 2, we are a company right now of 180 MW of capacity, so the nameplate capacity of the company will change dramatically over the next few years with the addition of the Mexico projects.
In addition to those, we have several other, call it, RFPs or convocatorias that we are participating in several other markets, including Puerto Rico and Dominican, and all of those are moving. We do expect clarity on Q4, I would say, for Puerto Rico, and hopefully that for Dominican, although I have a feeling that would slip into Q1. But we have a lot of other irons in the fire, and to go back to Mexico, there will be further processes next year that we would expect to participate in, the level of which does depend on, call it, the success that we have in Mixtos 2. Everything is moving forward, and we do expect to have more news this quarter about other opportunities to convert, call it, pipeline into reality, into real projects. With that, we can open it up for questions.
Certainly. Everyone at this time will be conducting a question-and-answer session. If you have any questions or comments, please press star one on your phone at this time. We do ask that while posing your question, please pick up your handset if you are listening on speakerphone to provide optimum sound quality. Once again, if you have any questions or comments, please press star one on your phone. Your first question is coming from Nick Boychuk from ATB. Your line is live.
Thanks. Morning, Marc. Curious if you can add a little bit of color on what happened with Canoa 2 in the Dominican and how that's changing maybe your ranking of capital allocation in that market, as well as how it's maybe impacting decisions that you're going to make in Puerto Rico and Mexico.
Yeah, I wouldn't say really much has changed. With curtailment in Dominican, Canoa 2 is not on the front burner at all, and it hasn't been for a bit now. We are focused on, call it, the RFP process for SADA, and then once that happens, and once, call it, whether it's 600 or 800 MW of storage capacity comes online, we can get back to considering capital allocation for Canoa 2. But that, realistically, is not for years. Given that, I wouldn't say it's really playing any role in the capital allocation strategy mindset for the next three years.
Understood. When you're talking about the storage opportunity with SADA in the Dominican Republic, are the economics and the returns on invested capital you're expecting similar to what you're seeing from either PREPA or a comparable contract in Mexico?
I would say it's probably in between the two. I would also distinguish though between I would say the ASAP is somewhat higher than what we could expect even from, call it, further growth in Puerto Rico. If I was to rank them in terms of returns, and they're all, I would say, above, call it, 15% IRR, right? So they're all very good. But if I had to rank them, it would go, ASAP would be at the top, then it would be, I would put, call it, new Puerto Rico and new DR storage next, and then Mexico just below. But the opportunity in Mexico would be, I would say, much bigger than sort of just pure storage on the islands.
Understood. We have spoken before about even coming out of the first RFP process in Mexico, maybe an opportunity to pick up some other projects, smaller operators who maybe do not have the capital or the resources to develop their projects. Are you seeing any interesting acquisition opportunities that you might be able to add to the 250 MW over the coming two to three years? Or is the focus truly now just on your own internal opportunities for the second RFP?
Yeah, I would say plan A is for sure our own. We do absolutely see other small developers with projects that are out there and that want. We are optimistic that it makes those two, that there is going to be enough for us, and we would be, I would say, at levels where we would not consider, call it, those other projects, just because there should be enough as for us now. But I would say if for some reason there is not, it would not be hard for us to kind of pivot and do something on those other projects. Then I would say, then if you look a little bit longer term than, let us say, the next 12 months, we are confident that we will be able to get some capital partners in locally in Mexico, and then that would be, call it, back half of next year.
To the extent that we do that, I think the conversation with them would be, "Okay, we are doing this. We are happy with the relationship, et cetera. We are building projects." As long as we are executing, I think those capital providers would be very open to us picking up some of these other projects that, for sure, the government will want to go ahead, but for sure will have issues raising capital.
Okay. Just to clarify, these capital providers, they would be coming in strictly with the capital, and then it is a JV structure. You provide the sweat equity to local expertise, ability to run the facilities, and then you guys share the economics, I am assuming, on a kind of 50/50 basis?
Yeah, that's definitely the idea. I think we need to be, I would say, compensated for the fact that we're putting equity in first and that we're getting things, ticking all the boxes and the development milestones and getting them ready to build, getting the project finance done. That money will come in later, but I think that we will be, call it, compensated for the extra risk, so to speak. It's hard to comment exactly on whether it's 50/50 or 60/40 or 40/60. I would say I'm maybe less focused on that than I think let's just say we were 40/60. I don't think our control would be any less than if it was 50/50 because I think that they would truly be, call it, capital providers that are comfortable with us operating plants, developing them, et cetera.
We would be more focused on, I would say, making sure we get a very good sort of cost to capital.
Okay. Sounds good. Appreciate the call, Marc.
Okay. Thanks, sir.
Thank you. Once again, everyone, if you have any questions or comments, please press star then one on your phone. Please hold while we poll for questions. Thank you. That completes our. Our next question is coming from Nick Boychuk from ATB. Your line is live.
Awesome. Thanks. If there's no one else, Marc, I'll just quickly lob another one in here. Just on the Trina Storage supply contract you signed, obviously gross CapEx of $55 million-$60 million. Can you walk us through a little bit your expectations on any net credits that you receive from that partnership? Are you still eligible for ITCs? Any logic in choosing them over any other vendors? Just interesting color for how we're thinking about the future RFPs.
No, going that way, we've had to forgive the ITCs, for sure. So, although there's a theoretical possibility that you could still get it, but it's highly unlikely. So really getting, call it, a U.S. supplier where you could get the ITCs or even, for instance, LG from Korea. So there were some other options, but our assessment was that the either timelines or total cost, or net cost, even with ITCs, was actually higher than doing what we did without them. So there is a huge difference in cost per kilowatt-hour between the vendors. I would say that in our other markets, like Mexico, like Dominican, I would say part of the thinking was, is that we could be working with the same equipment supplier in those other markets. I would say that those economics work fantastically well in the other markets.
Okay. Amazing. Makes sense. Thank you.
Okay.
Thank you. That completes our Q&A session. Everyone, this concludes today's event. You may disconnect at this time and have a wonderful day. Thank you for your participation.
Okay.
Thank you.