Good day, and welcome to the Explorer Infrastructure 4th Quarter and Full Year 2025 Earnings Conference Call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star then 1 on your touchtone phone. To withdraw your question, please press star then 2. Please note, this event is being recorded. I would now like to turn the conference over to Kanji John, Director of Investor Relations. Please go ahead.

Thank you, Danielle. Good morning, everyone, and thank you for joining our fourth quarter and full year 2025 Financial Results Conference Call for Explore Infrastructure. With me this morning are Alan Liu, President and Chief Executive Officer of Explore Infrastructure, and Jessica Jeffery, Chief Financial Officer of Explore Infrastructure. Alan will start with opening remarks, and then Jessica will provide an overview of our results and near-term priorities. Our executive team will then be available to answer your questions. On this call, we'll be making forward-looking statements based on current expectations and assumptions, which are subject to risks and uncertainties. Actual results could differ materially from our forward-looking statements if any of our key assumptions are incorrect or because of other factors discussed in today's earnings news release and the comments made during this conference call, in the risk factors section of the accompanying presentation, or in our latest reports and filings with the Securities and Exchange Commission, each of which can be found on our website, www.xplrinfrastructure.com. We do not undertake any duty to update any forward-looking statements. Today's presentation also includes references to non-GAAP financial measures. You should refer to the information contained in the slides accompanying today's presentation for definitional information and reconciliations of historical non-GAAP measures to the closest GAAP financial measure. With that, I'll turn the call over to Alan.

Thank you, Kanghee. Good morning, everyone. 2025 was a pivotal year for Xplore as we transitioned to a capital allocation business model. Our strategy in the near term is focused on simplifying Xplore's capital structure and executing on selected investments enabled by our existing portfolio of energy infrastructure assets. We believe executing on this strategy will enhance Xplore's financial and strategic flexibility, position Xplore to benefit over time from demand growth in the U.S. power markets, and ultimately maximize the long-term value of our assets for unit holders. To that end, a year ago, we presented a plan that called for executing on selected asset sales, addressing near-term debt maturities, buying out certain convertible equity portfolio financings, or CEPIS, and investing in selected wind repowering projects with attractive returns. Today, I'm pleased to report the team has delivered on every major action item we laid out a year ago. First, on operational and financial performance, Explore delivered full-year adjusted EBITDA of $1.88 billion and free cash flow before growth of $746 million. We believe these results reflect the strong underlying cash flow generating capabilities of our assets. We also achieved capital structure simplification objectives by addressing two CEPIPS, which resulted in a reduction of more than $1.1 billion in third-party non-controlling equity the interests. We completed the sale of our investments in the Mead pipeline and certain distributed generation assets, generating approximately $160 million of net proceeds that were used to support a $250 million reduction in corporate debt issuance previously contemplated for 2026. We achieved plan financing objectives by raising approximately $1.6 billion of project financing commitments to recapitalize certain assets and fund our wind-repowering program. We also addressed near-term corporate debt maturities, including pre-funding 2026 maturities with an early notes issuance in November. As a result, we have now completed the financing plan we laid out for 2025 and 2026 and extended the duration of our debt maturity profile. We also made strong progress on our capital investment program. As of today, we have completed nearly 1.3 gigawatts of our previously announced repowering plan, with projects achieving commercial operations on time and on budget. All in all, we are pleased with the team's execution thus far. Looking forward, we believe long-term fundamentals continue to improve for existing energy infrastructure assets, particularly those that provide efficient, clean energy. Explore's large and diversified portfolio of power generation assets produce substantial cash flows under long-term contracts with a strong set of credit-worthy customers. So our thesis remains the same. In the near term, retaining the cash flows generated by our portfolio should allow Explore to continue to advance its capital simplification strategy while also maintaining balance sheet strength and prudently managing liabilities. In using retained cash flows to fund selected SEPF buyouts, we plan to continue to reduce third-party investor ownership in assets that are highly valuable and that we believe could provide Explore with future upside. Our cash flows are also supporting selected investments enabled by our existing assets, such as repowering projects that we expect will provide strong risk adjusted return on capital and enhance the long-term value of our fleet. We believe Explore's relationship with Nexder Energy provides meaningful competitive advantages when it comes to executing on these investments. The long-term service agreements with Nexder Energy explore benefits from scale and operations, engineering and construction expertise, and supply chain access. These are advantages that are difficult for standalone platforms to replicate. We believe our strategy, commitment to capital discipline, and strong execution will continue to enhance Explorer's financial and strategic flexibility and position it well to realize its upside potential over time. One example of how Explorer is unlocking embedded value in its portfolio is through the Interconnection Sale and Battery Storage Co-Investment Agreement with Next Energy Resources that we are announcing today. Through this agreement, Explorer Infrastructure is monetizing surplus interconnection capacity and rights at certain of its existing project sites through sales to next energy resources explorer will also have the ability to co-invest alongside next energy resources in four of the new battery storage projects co-located with existing explorer sites the storage projects which total 400 megawatts of capacity have long dated capacity agreements with investment grade off takers and are expected to reach commercial operations by the end of 2027. for explorer we believe this agreement creates a clear and capital efficient way to add up to approximately 200 net megawatts of storage capacity to our portfolio while generating strong project-level equity returns. By using proceeds from the planned sales of interconnection assets and rights to fund its net equity investment in these projects, Explore can generate new cash flow streams with zero expected net corporate capital commitment. Let me talk through in detail how the agreement is structured. Each of the four projects co-located on existing Explorer sites is expected to be owned in a joint venture between Explorer and Xternergy Resources. Explorer has the right to invest up to a 49% ownership stake in each project. If Explorer elects to exercise its co-investment rights across all four projects, its expected net equity contribution is approximately $80 million after receipt of asset-level financing proceeds. To partially fund this investment, Explorer has agreed to sell certain interconnection assets and rights to the four co-located battery storage projects for approximately 31 million. Explorer will also sell additional interconnection assets and rights to a subsidiary of NextEner Energy Resources to enable a 150 megawatt storage project co-located with Explorer's Palo Duro wind site for approximately 14 million. To fund the balance of its expected net equity contributions, Explorer intends to sell to NextEner Energy Resources interconnection assets and rights to enable up to 500 megawatts of potential future battery storage projects on different Explorer sites. Explorer will not have co-investment rights on these additional projects or the storage project co-located at the Palo Duro site. As part of the agreement, Next Energy Resources will provide development, engineering, construction services as well as equipment to the four joint venture projects and will fund the balance of total project costs not invested by Explorer. This co-investment structure, which is subject to customary conditions, is expected to provide Explore with the flexibility to bring high-quality projects to fruition on an accelerated timeline with significantly reduced execution risk and is an efficient pathway to monetize non-cash flow generating surplus interconnection capacity embedded within existing assets. Repowering is another way that Explore enhances the value of its portfolio. Given our execution progress in 2025, today we are updating our previously announced 1.6 gigawatt repowering plan to approximately 2.1 gigawatts through 2030. The 500 megawatts of repowerings added to our current program are expected to deliver strong equity returns and take advantage of a window of opportunity to execute projects that enhance the value and longevity of our fleet. We anticipate that the new wind repowerings will be funded through a combination of retained cash flows and additional project-level financing. While the total repowering opportunity set in Explorer's portfolio is larger than the announced additions, we plan to continue to cadence our investments in a manner that maintains our near-term balance sheet priorities while achieving attractive returns. Over time, another way that Explorer's portfolio could realize upside is through recontracting at higher prices as our existing power purchase agreements expire. Today, approximately 80% of the megawatt hours that we sell are contracted at prices that are below where the market prices are currently, and where power prices are forecasted to be in the future when contracts mature. Using third-party forecasted power prices to illustrate potential for further upside, the existing portfolio is estimated to be able to deliver more than $200 million of incremental revenue by 2040, recognizing that actual outcomes will depend on market conditions at the time of contracting and our execution. In summary, Explorer is a scaled, contracted clean energy infrastructure platform with durable cash flows and a long operating runway. Explorer's assets are located across a diverse set of U.S. power markets that are experiencing increasing demand and tight supply. As those dynamics continue to play out, we believe our portfolio has significant embedded value and investment opportunities that can be harvested over time. We are taking action to ensure Explorer's position to capture those opportunities as they may arise. With that, let me turn it over to Jessica, who will review the 2025 results in more detail and discuss near-term priorities for the business.

Thank you, Alan, and good morning, everyone. Let's begin with Explorer Infrastructure's detailed results. For the full year 2025, Explorer's portfolio generated approximately $1.88 billion in adjusted EBITDA and $746 million in pre-cash flow before growth. The full-year adjusted EBITDA results were primarily impacted by the absence of an approximately $40 million one-time settlement payment that benefited the fourth quarter of 2024 and asset dispositions. As a reminder, Explore sold its investments in the Mead Pipeline and certain distributed generation assets in the third quarter of 2025. These impacts were partially offset by improved pricing, including contract escalators and more favorable market conditions at certain projects, as well as lower net operating costs. Our 2025 free cash flow before growth results further reflect the impact of higher interest expense on corporate debt, which was issued during the year as part of our refinancing and capital structure simplification efforts and the timing of tax credit monetization. Taken together, the 2025 results reflect a portfolio that continues to generate strong cash flows from long-duration contracted assets. This performance provides a solid foundation as we continue to execute our capital allocation priorities and manage the business with a focus on cash flow and balance sheet discipline. For 2026, we continued to expect adjusted EBITDA of $1.75 to $1.95 billion and free cash flow before growth of $600 to $700 million. As always, our expectations assume our usual caveats, including normal weather and operating conditions. Turning to our capital structure simplification efforts, we successfully addressed more than $1.1 billion in SEPIFs in 2025. Specifically, we bought out the remaining third-party non-controlling equity interest in our SEPIF-1 asset portfolio, and we used the proceeds from the sale of our investment in the Mead pipeline to address SEPIF-2. Before I talk through our plans for the remaining three SEPIFs, I believe it is helpful to take a step back and explain how we think about these structures more broadly. SEPIF structures were designed to provide Explore with flexibility over time. That flexibility includes the option to buy out the CEPHF investor's equity interest in the assets under economic terms that were set at the time the CEPHFs were formed. Our decisions on whether or not to exercise the call options are investment decisions that we continuously evaluate relative to all other capital allocation opportunities and balance sheet priorities. To the extent Explore chooses not to exercise the call option, it can pursue a sale of the underlying assets with the consent of the SEPF investor or, alternatively, let substantially all of the cash flows from the underlying assets transfer to the SEPF investor. For SEPF III, we continue to evaluate our options, including a potential sale of the underlying assets. However, we do not have to make a definitive decision until the fourth quarter of 2027. At this time, given the expected equity returns on the buyouts and the potential upsides we see in the associated assets, we view the future buyouts on SEPF IV and V as an attractive use of retained cash flows. We expect to exercise our call option on the first partial buyout for SEPIF-5 later this year. The first opportunity for Explore to exercise a call option for increased equity in SEPIF-4 is not until the end of 2028. We will continuously evaluate all of the SEPIFs over time in the context of our capital allocation priorities and will remain open to all potential options to maximize value for unit holders. Putting it all together, Explore's current plan would result in a more than $2 billion reduction in third-party non-controlling equity interest in our assets by 2030. Importantly, the plan is expected to deliver this outcome without putting undue pressure on the balance sheet or relying on the issuance of new equity. As we look ahead to the next couple of years, our focus is on executing against the updated capital investment plan we have outlined today. We plan to increase our equity ownership in SEPIP-5 with partial buyout investments of approximately $150 million in 2026 and $470 million in 2027. We expect to complete approximately 350 megawatts of incremental repowerings and add approximately 200 net megawatts of battery storage capacity to our portfolio through our new agreement with NextEra Energy Resources. We are also focused on addressing upcoming maturities in a disciplined manner and continuing to optimize the portfolio where opportunities allow us to unlock embedded value. Our capital plan through the end of the decade is expected to be largely funded by retained cash flows from the existing portfolio. Where appropriate, we expect to supplement that with project-level financing and selective use of corporate debt, all within our overall framework to enhance financial flexibility and maintain appropriate leverage. Our current capital plan is also supported by a strong and flexible liquidity position, including our fully undrawn revolving credit facility. We recently reduced the size of our corporate revolver from its previous level of $2.5 billion to its current level of $1.25 billion to further demonstrate discipline and align with our funding needs. Specifically, Explore only has $750 million or less in corporate debt maturities over any 12-month period through year-end 2030. We believe that the combination of liquidity, robust cash flow generation, and a disciplined capital plan allows Explore to appropriately allocate retained cash flows in a value-maximizing manner as we execute over time. That discipline underpins our strategy and focus on long-term value creation as we take actions today that we believe strengthen Explore's platform for the future. That concludes our prepared remarks, and we will now open the line for questions.

We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star, then 2. The first question comes from Nelson Ng from RBC Capital Markets.

so please go ahead. Great, thanks, and good morning, everyone. The first question I have just relates to capital allocation. I know slide 12 has some details for the 2025 to 30 period, but just let me know if I'm thinking about this correctly for the 26 to 2030 period. So, if free cash flow without growth is about $600 million to $700 million per year going forward, and if it's flat for the next five years that's like three to three and a half billion of cash of which i think roughly 2.2 billion would be used for cephas cephas four and five so does that mean there's about one billion of uh capital available for investments and debt reduction and i think what I'm trying to get to is can you just talk about whether there's room for unit buybacks or restarting distributions over the next five years? And then the last part of that question is I think for 2030 you have about $7.8 billion of total debt, tax, equity, and CEPHIS at the end of 2030. I was just wondering what your assumptions are for the use of excess cash.

Hey, Nelson, this is Alan. I think, you know, what we've highlighted today is that in the operating environment that we're in, right, with what we feel is increasing fundamentals for power generation outsets, it makes sense for us to continue to invest in this portfolio to position it well such that we're able to realize upside in the portfolio and to enhance the value of the portfolio. So I think what you need to also account for in your math there is that we have spent and have just announced today additional investments into the portfolio. And that's the capital, CapEx piece that's outlined in that slide that you're referencing. So retained cash flows fully cover the set of buyouts and the equity investments into our portfolio. You have some incremental cash flow of which is going to partially fund the investments that we've announced. and then there's selected use of project debt to be able to finance the balance of it. Does that make sense? Yeah, that makes sense.

And then just one quick follow-up. For CEPHIS III, in your previous plan, I think you gave people the impression that you would look to sell the underlying assets, and I think now you're evaluating your options given that you don't have to make a decision until late next year. but can you just talk about what has changed since then or what has changed in the last few months?

So no change in the plan, Nelson, right? So I just want to be clear about that. However, we continue to think about how do we help investors and analysts understand these CEPIs. And I think the right way to think about it is they're partnerships in which our partners have given us a series of call options that can be exercised over a period of time. Now, as we sit here today, this call option doesn't have to be exercised until 2027. And so, therefore, we're just making sure people understand that there's no need to exercise the call option early, and there's no need to monetize that call option early. To the extent that we don't choose to exercise it, as Jessica said, we have a number of options. Number one is you could potentially sell the underlying assets. So this is similar to what we did with Mead. we sold the assets, we raised enough proceeds to be able to address the SEPF, as well as we took out excess proceeds from the sale. Now, if we don't go down that pathway, we also have the ability to allow the majority or substantially all the cash flows to flip to the SEPF investor. So those are also continued to be our options, but we're just highlighting that it's a call option that there's still time and maturity on it, and we don't have to make a decision on that

today. Got it. Thanks for clarifying. I'll leave it there and get back in the queue.

The next question comes from Julian Dumoulin-Smith from Jefferies. Please go ahead.

Hey, good morning. This is Hannah Velazquez on for Julian. Thanks for the update. Congrats on the quarter. I just wanted to get a sense of timing on when these battery drop-downs might come to fruition and be reflected in your results. Don't think they're included in the 2026 bridge to free cash flow before growth.

That's correct. these are expected to reach commercial operations by the end of 2027 so they would be adding to 2028 and beyond cash flows okay got it thank you and then

also as a follow-up interesting to see the continued relationship or I suppose the return to drop downs with next era how can we think about future opportunities there is there anything beyond batteries that you might consider

So I would say, first of all, we've made no commitments beyond the transaction that we announced today. I think this is also different. I wouldn't think of this as a dropdown, right? These are effectively co-located projects, projects that are co-located with existing Explorer sites. Each partner is contributing a piece to this, right? Obviously, we own interconnection assets, so we are monetizing a portion of those physical internet connection assets to be able to enable the co-invest of the co-located storage. And XTERRNG Resources is then coming in and providing all of the development, the construction, the equipment to take basically these rights and internet connection assets and to form it into a fully developed project. So it truly is a partnership that's come to fruition here. We really like this co-investment opportunity. But either way, basically we're saying, hey, we're able to monetize it in multiple different ways, right? We can either monetize our extra plus interconnection capacity as a sale for cash or a potential to roll it into a stream of contracted cash flows at our choosing. Hopefully that clarifies the understanding of this.

Yeah, and just as a follow-up there, is there any intention to, you know, maybe in the longer term or beyond 2030 return to drop-downs?

We are only focused on kind of the capital plan that we've laid out at hand at this point, right? So, we haven't committed to anything beyond the deal that we're announcing today.

Okay. Thank you. The next question comes from Christine Cho from Barclays. Please go ahead.

Good morning. Great to have these earnings calls again. on slide six you know you list out these projects that you the battery storage agreements I'm just curious like some of these you have the option to invest and some of these you don't so just curious how you and near determine which ones you are eligible to invest in so I think the right way to think about it is we

started with a how do we create incremental cash flows for Explorer but in the midst of everything else that we've outlined as capital priorities not create incremental funding requirements right for for Explorer and so really it's the self-equitize if you will and so as we thought through that it was hey we're gonna agree to identify additional projects that we can sell in order to fund our co-investment into the four projects. And that was how the deal was structured.

Okay. And so then you quantify, you know, $45 million from the sale of surplus interconnection. And then I guess like this to be identified line item would bridge the additional $35 million that you would need for the $80 million for co-investment. How should we think about what the opportunity set for potential sales of surplus interconnections and rights is

for your entire portfolio outside these assets? Yeah, I think many of our assets have surplus interconnection capacity, as we've alluded to and then talked about before. But I think it's every project is different, right? Every location is different. So it really comes down to the project specific economics and the opportunities of that project so obviously you know we're announcing this and these are projects that we find very attractive today and and you know the value the option to be able to co-invest in these storage of projects we like it a lot so I wouldn't read you know infer is further into that other than you know we do have other interconnection assets and we'll continue to think about how we optimize those for Explore.

As a reminder, if you have a question, please press star 1. The next question comes from Mark Jarvie from CIBC Capital Markets. Please go ahead.

Good morning, everyone. Some interesting updates today. Just on that last point about other assets where you could monetize interconnection rates, is it fair to assume that the assets underlying the CPFs 3 to 5 wouldn't be sort of eligible at this point or likely to be?

Yeah. So, again, I think about, I would point you back to a step if we have an equity partner in that business, right? So to the extent we're moving forward with any of that front, then the equity partner has a say in how those assets are monetized. And ultimately, you know, the economics would be shared, right?

And then a key comment a little bit on returns between the battery joint venture investments versus the repowerings and just how the next phase of repowerings are comparing versus the ones you've already acted on in 2025?

So we've said in the past that we're targeting minimum double-digit returns for repowerings, and simply those are, in our minds, very low-risk projects that are sites that we control, right? These are very attractive projects, particularly if you think about it as we've taken assets that weren't producing any cash flows and converting them into either cash proceeds or streams of cash flows. So, you know, they're highly attractive projects.

And just in terms of the battery investment opportunity, would they be modestly lower returning projects versus the repowerings? It's still double-digit?

Yeah, I was referring to the storage projects, right? If you have the repowerers as double-digit minimum, These are very attractive, and particularly if you think about it as taking non-cash flow assets that are embedded in a portfolio and creating cash flow streams out of them.

And not that it's a big number, but can you just clarify, is the $80 million of equity financing around the monetization of the interconnection assets, is that essentially done now? And sort of, I guess, if it doesn't, is there a fallback plan in terms of that funding gap?

Yeah, I think the way to think about it is with this transaction, you have a pathway to at least half of the proceeds, the net equity investment, right? Again, we have an option to go invest, and really the option is finalization of our evaluation of the development plan. And then the other half of it is, you know, we have an agreement with Next Energy Resources to identify and seek other asset sales to be able to fund the balance of it.

And when would you meet or plan to reach an investment decision?

We have, under the agreement, 45 days to finalize our evaluation of the development plan and make an election.

That's great. All right. Thanks for the time.

This concludes our question and answer session, and the conference is now concluded. Thank you for attending today's presentation. You may now disconnect.