Review of Northland Power Inc.

MAR 18, 2025 - NPI is expected to enjoy meaningful tailwinds in its business model, given that global energy consumption is expected to grow by low single-digit consistently over the long term. This growth is due to a growing demand for renewable energy to tackle climate change. The recent operating results were not promising, given the decline in both adjusted EBITDA and Free cash flow per share, which explains the pressure on its share price. That being said, the guidance and positive catalysts, including stabilized inflation, declining interest rates and large projects that are expected to achieve full commercial operation later in 2025, could improve future operating results. NPI has a healthy pipeline of growth projects, which were funded through a combination of debt issuance and internally generated cash flow. NPI is a stable dividend payer that offers a “bond-like” yield for income-seeking investors. Despite unimpressive recent operating results, we are maintaining our rating for NPI at ‘B’ for now but we would be open to a downgrade if the company does not improve the fundamentals over time.