Northland Power Inc

TSX:NPI

Earnings Call Transcript 2018-Q3

[Operator]

Ladies and gentlemen, thank you for standing by. Welcome to the Northland Power conference call to discuss the 2018 third quarter results. [Operator Instructions] As a reminder, this conference is being recorded Wednesday, November 7, 2018, at 10 a.m. Conducting this call for Northland Power are Mike Crawley, Chief Executive Officer; Paul Bradley, Chief Financial Officer; and Dhiraj Shangari, Corporate Finance Manager.Northland Power Management has asked me to caution you that their summary of results and responses to your questions may contain forward-looking statements that include assumptions and are subject to various risks. Actual results may differ materially from management's expected or forecasted results. Please read the Forward-looking Statements section in yesterday's news release announcing Northland Power's results and be guided by its contents in making investment decisions or recommendations. The release is available at www.northlandpower.com.I will now turn the call over to Mike Crawley. Please go ahead.

[Mike Crawley, CEO & President]

Thank you, operator, and good morning, everyone. Thanks for joining us today as we review our third quarter results. We had another productive quarter and continued to make progress towards achieving our 2018 growth and financial objectives. Paul will take a deeper dive into our financial results shortly, but first, I'll provide an overview of the highlights. We received a 23% increase in our adjusted EBITDA to a total of $197 million compared to $160 million the same quarter last year. Our free cash flow per share increased by 38% to $0.36 compared to $0.26 for the same quarter last year. Now turning to construction. We continue to advance our 269 megawatt Deutsche Bucht offshore wind project on time and on budget. As previously reported, installation of offshore foundations began in September, Deutsche Bucht, with 13 installed to date. We expect all foundations, including the 2 mono buckets to be installed by the middle of 2019. Project completion remains on track for the end of 2019. With Deutsche Bucht moving along to plan, we continued to advance our Hai Long projects in Taiwan. These 2 projects will increase Northland's offshore wind operating capacity to 2,245 megawatts or net 1,538 megawatts by 2026. Total gross operating capacity would increase to 3,742 megawatts for Northland, an increase of more than 50% from today.The team is focused on completing the final permitting and moving those projects to final close, financial close and construction. And last but not certainly the least, our operating facilities performed well, and most importantly, safely over the quarter. Excellence in operations is the key focus for Northland. As predictability, the performance of our operating assets enable us both to comfortably pay our dividend to shareholders while supporting our development activities.To that end, as we announced in September, we have established a German offshore wind operation hub, which reflects our focus on optimizing the performance and availability of our operating fleet. This hub is managing operations from Nordsee One, and once completed, will also manage the operations for Deutsche Bucht. This will allow us to realize synergies between the 2 projects and provide better control over the operations of these key assets.The hub will also support our development procedures moving forward. Technical capabilities and knowledge are competitive advantages, particularly in offshore wind development and procurement bids -- tenders. So excellence in operation is therefore a competitive advantage for Northland on many levels.Overall, we feel positive about our ability to achieve our growth and financial objectives.Now I'm going to turn it over to Paul, who will provide you additional detail on our financial results.

[Paul J. Bradley, Chief Financial Officer]

Thank you, Mike, and good morning, everyone. Last night, Northland Power released its 2018 third quarter results. Northland generated $197 million of adjusted EBITDA in Q3, which represents a 23% increase over the same period in 2017. Significant factors increasing adjusted EBITDA include: $19 million from all of Nordsee One's turbines producing power during the quarter, whereas the project was under construction last year; and a $17 million increase at Gemini due to higher production and wholesale market prices. These favorable results were partially offset by a $3 million decrease in Kirkland Lake due to a maintenance outage and lower curtailment revenue, and a $2 million net decrease in contribution from Northland's other operating facilities.With respect to free cash flow. Northland generated a total of $64 million in the third quarter, which represents a 41% increase compared to the same period in 2017. On a per share basis, free cash flow increased from $0.26 in the third quarter of last year to $0.36 this quarter. The significant factors increasing free cash flow were: $42 million from higher production at Nordsee One; an $18 million increase from Gemini due to higher production and wholesale market prices; and a $5 million positive variance, largely due to a lump sum payment in 2017 under North Battleford's gas turbine maintenance agreement. Factors that partially offset the decrease in free cash flow include: a $45 million increase in scheduled principal repayments, primarily for Gemini and Nordsee One debt; and a $2 million net decrease in contributions from Northland's other operating facilities.As at September 30, 2018, the rolling 4-quarter free cash flow payout ratio was 65%, calculated on a total dividend basis compared to last year's payout ratio of 61%. The increase in the payout ratio is primarily due to the impact of the onetime EUR 31 million cash distribution from Gemini in the second quarter of 2017, net to Northland and due to Nordsee One making its first principal repayment in the second quarter of 2018.GAAP net income was $93 million for the quarter, which represents an increase of 194% from 2017. This is primarily due to higher operating income and a noncash fair value gain on derivative contracts, partially offset by higher deferred income tax expense and finance cost.As we get close to the end of the year, we have narrowed our 2018 guidance to reflect historically lower-than-average wind speeds in the North Sea, which affected in production at Gemini and Nordsee One for the first 9 months of the year. Adjusted EBITDA for 2018 is expected to be in the range of $870 million to $900 million, and this is a change from $860 million to $930 million previously. And free cash flow per share for 2018 to be in the range of $1.75 to $1.95 per share, an adjustment from the $1.70 to $2 per share previously disclosed.On another note, under the terms of Northland's dividend reinvestment plan, we have reduced the effective discount from the current 5% to 0%, and if indicated, that further DRIP shares may be funded from market purchases. We are implementing this change due to improved liquidity and strength from the balance sheet to fund any equity requirements for future growth without the need for equity dilution.I will now turn the call back to Mike for concluding remarks.

[Mike Crawley, CEO & President]

Thank you, Paul. As I said, earlier, Northland remains very well positioned to achieve its 2018 objectives. Our business strategy is focused on enabling us to meet our commitment to our investors. This commitment is clear and unwavering. Our plan going forward and the development options we are setting up globally will take us well beyond the 60% growth in adjusted EBITDA that we can already see with our current offshore wind projects in Germany and Taiwan. I like to describe Northland as conservatively entrepreneurial. We always -- we are always looking to be at the forefront of what's next, while thoroughly assessing and managing key risks along the way. With abundant power generation investment opportunities going forward, an openness to new asset classes and the people, plans and expertise in place globally, we are in a great position to sustain our growth trajectory. We remain committed to delivering excellent results from all perspectives, financial, operational, and as related to our growth initiatives.On that note, I'm pleased to share that we've issued our inaugural sustainability report. The report, which is available on our website, demonstrates our commitment to transparency and provide some additional insight on how sustainability drives all of our efforts at Northland.With the final quarter of 2018 well underway, we are working hard and working smart, and we'll keep you apprised of our progress. In the meantime, thank you for your continued confidence and interest in Northland. And we'd now be happy to take your questions.

[Operator]

[Operator Instructions] Our first question comes from the lines of Nelson Ng with RBC Capital Markets.

[Nelson Ng, Analyst]

A quick question on wind resources in the North Sea. I think back in September during the Investor Day, I think mike mentioned that even though -- like although wind resources were weak over the summer, they were kind of picking up in September. I was just wondering whether that trend has continued into Q4.

[Mike Crawley, CEO & President]

So that's correct. September was certainly much better than July and August, so it helped the -- helped a lot the quarter, but it was a tough quarter for wind. We're seeing, so far, wind coming in at about where we would expect it to, but we're keeping a close eye on November and December, obviously, going forward. And to be clear, I mean, November and December obviously are most productive months -- so among our most productive months, so those we'll keep a close eye on.

[Nelson Ng, Analyst]

Okay. And then this question is also for Mike. In terms of onshore renewable developments in Alberta and Saskatchewan, I believe you mentioned that you are active or looking at projects in those 2 provinces. I guess based on the wind contract award by SaskPower, the recent one, do you have any kind of updated thoughts on the attractiveness of projects in Alberta and Saskatchewan? And also your thoughts on development returns.

[Mike Crawley, CEO & President]

Sure. I mean, we like development opportunities that have -- we can see some barriers to entry, right, and where there's either some development, financing or technical challenges that we can leverage the talent of our team to overcome and get superior returns. There's no question that when you look at onshore renewables, where you have a government-backed 20-year PPA, that those returns are reducing significantly, right? So those types of opportunities. That has been the case in the first-round procurements in Alberta and Saskatchewan. There's still an opportunity in those 2 provinces to differentiate yourselves by the quality of your -- of the site that you have both in terms of wind resource, but also in terms of proximity to transmission and there's other factors as well, obviously. So there's still some opportunity there. And we certainly have interest in securing investment opportunities and new Canadian assets in terms of securing the tax pools that go with them. So let's say in other markets, you can -- you see that we haven't moved aggressively into the U.S. renewables, onshore renewables, and that's part of the reason why. We don't see necessarily the value that we think our investors would expect from investments, certainly haven't so far. In Canada, it's slightly different, because there is an advantage at the corporate level to securing the tax pools that go with new Canadian investments.

[Nelson Ng, Analyst]

And then just on the tax pools, like roughly, do you have a rough estimate as to your cash tax payable [ date ] in Canada? Do you have any of all these other, I guess, international investments making cash distributions into Canada?

[Paul J. Bradley, Chief Financial Officer]

Yes -- no, see, it really does depend on some of the development plan going forward and what we do land or not land. But we sort of see it creeping in, sort of as you get around the middle of this coming, I guess, this decade, in the 2020s. But again, it's a moving calculation and it will depend on a number of factors. But it's sort of middle of the decade issues where if we don't do more Canadian deals, and replenish the tax pools, so we'll start paying some cash taxes.

[Nelson Ng, Analyst]

Okay. And then just one last question before I get back in the queue. In terms of your DRIP, you mentioned that you'll be kind of buying shares in the open market to -- for the use like for the -- for the use of the DRIP. But have you considered share buybacks on a larger scale?

[Paul J. Bradley, Chief Financial Officer]

That's -- we're discussing it internally. I don't know that we would necessarily affect the share buyback. We'd have to come up obviously with what price at which we would do that. But as we said, generally, the business outlook going forward is we're investing capital and securing returns greater than our cost of capital. So buying back shares generally works against you roughly at around the current level of prices, share prices. But we've seen some volatility, we've seen some dislocation, we've seen some external factors beyond our control. So there could be a point at which we would actually affect that, but all that is going to -- all I can say is stay tuned. But we -- would be good to have something like that in our toolbox, but I don't see us naturally being a big buyer of shares given how much capital we're going to need for our development business.

[Operator]

Our next question comes from the line of Rupert Merer with National Bank.

[Rupert M. Merer, Managing Director and Research Analyst]

So looking at the low winds in the North Sea, can you talk about how generation in this quarter compared to your long-term average assumptions? And how your long-term average assumptions may be evolving as you get some experience in the wind farms?

[Mike Crawley, CEO & President]

Well, I mean, there's not a lot of production history, obviously, on Nordsee One and Gemini to date. So in terms of how the production in the quarter was relative to what we would have expected from the long-term average, it has -- I described and as Paul described, the production over the full 9 months has been below what we would have expected. And I think for those of you that are following other IPPs with generating assets in Northern Europe, you would have seen similar patterns through the last several months. So certainly, it is as we've described. The wind resource has been abnormally low which is going to happen. You're going to have some strong years, some weak years and average it out and some strong quarters and some weak quarters and it averages out. But certainly, the period this quarter was below what we would have expected.

[Rupert M. Merer, Managing Director and Research Analyst]

From everybody's measures, I think?

[Mike Crawley, CEO & President]

From all measurements exactly.

[Rupert M. Merer, Managing Director and Research Analyst]

Are you willing to take a stab at how much it's below your long-term average assumption?

[Mike Crawley, CEO & President]

No. I mean, we'll -- at the year-end, we'll certainly give a view in terms of kind of how the year has been and how production has been overall. And I think as you start parsing into kind of increments of quarters and months and so on that you start moving away from kind of meaningful analysis. And I think the longer-term is a better way to look at it. We'll certainly give a view on how the production has been over the full year.

[Paul J. Bradley, Chief Financial Officer]

Yes, and I'd just add, I mean, Q3 is always a low quarter anyway for wind production. And not to exaggerate the analogy, but it would be like pressing a retailer in early November to say, how do you think your year is going to turn out. It's all about late November and December for a retailer. And like offshore wind is kind of this normal -- this ironically the same phenomenon, where if we have -- we're a few days into November. Things are looking okay for so far from what we can tell. But really, the next 7, 8 weeks are going to be really important to see where you coming in to home play it on the wind production.

[Rupert M. Merer, Managing Director and Research Analyst]

Okay, very good. And on the wholesale market for Gemini, I think you indicated there were some strength there. Can you give a little more color on where you see that market heading? And maybe where it's been over the last few months?

[Mike Crawley, CEO & President]

So if you remember on the Gemini project, we have a small bit of merchant exposure in 2 ways. One is if the prices are below a floor, we're [ aware ] of that. And also, once we hit our cap on our SDE contract, which is the revenue stabilizer, then we usually have sort of sometime in the third quarter -- or sorry, late -- early fourth quarter, we break in to the marked -- the merchant period where we're beyond our SDE contract. So we try to match Gemini's revenue with all of the traffic in the production and the prices in the market. It's a little hard to kind of extrapolate it straight line. But that contract by definition was there to tap down the variability in the wind resource, and it does a good job. We're pleased the prices are higher this year on average, because we do get paid on the average not just when Gemini is blowing -- when the -- when we're on the merchant revenue. So the merchant revenue would actually offset some of the lower wind production. Pardon it took me a long time to say that, but just to explain how we get there.

[Rupert M. Merer, Managing Director and Research Analyst]

And is that market looking firm going into Q4 and to next year?

[Paul J. Bradley, Chief Financial Officer]

As far as we can tell, there's nothing structural that should make any large changes. But as we all know, these markets kind of wander where they wander to. And you look at Alberta, you look at really any market, that's -- it seems that things have firmed up in a number of markets around the planet.

[Operator]

Our next question comes from the line of Bryan Fast with Raymond James.

[Bryan Fast, Senior Associate]

So just regarding global offshore wind activity, is there any RFPs or transactions of note in markets that you are targeting?

[Mike Crawley, CEO & President]

So what is -- so in Taiwan, there's been an announcement that there's going to be some regulations coming up towards the end of this year for a further procurement of offshore wind. So we're obviously tracking that and looking at that and seeing how we could participate in any future procurements in Taiwan. Certainly, it would be in an advantageous position given our presence there and the operational and supply chain synergy that we perhaps could realize on further projects. So we're tracking that. We're tracking what's going on in Japan and Korea quite closely. I believe there's a legislation that's supposed to go through the Japanese Diet, their legislative body, later this year to allow for -- essentially allow for the site tenure or site control for offshore wind projects. We're tracking that, and we continue to dialogue with developers in both of those markets, Korea and Japan, to see if there's a good partnership opportunities for Northland.

[Bryan Fast, Senior Associate]

Excellent. And then I'll just carry on with Taiwan here. More specifically, what are the next milestones that we should be expecting?

[Mike Crawley, CEO & President]

Sure. So next deliverable that we have is next fall, we have to present a local content plan for the FIT award, so the 300 megawatt FIT award. As you recall, there's 3 contracts that we have to secure through an auction, and then 1 FIT award. This is for 300 megawatts, a total of just over 1 gigawatt. So that has to be produced next fall. So we're actively working with the supply chain to secure what we need to fulfill that obligation. We're also working to secure our permits and stakeholder agreements such as with the fisheries association. So that work is continuing through the fall and will extend into 2019. Once all of those permits are secured, we would then be in a position to apply for a PPA at some point in 2019.

[Operator]

Our next question comes from the line of Sean Steuart with TD Securities.

[Sean Steuart, Research Analyst]

A couple questions. The corporate and development expenses this quarter were a little lower than we expected. And I recall that Q2 was a little bit inflated. Can you give us a sense of how you would expect that line item to trend normal course on a quarterly basis going forward?

[Mike Crawley, CEO & President]

Development spend is, by its nature, somewhat chunky. It depends how fast individual projects move forward that we're developing and it depends on which M&A pursuits for example we choose to go after. So I wouldn't look at a quarter-by-quarter spend to determine the level of activity. It's more just related to when some activities ramp-up that are -- that incur costs, that there is a lot of activity there going on all the time that did not incur cost, that are just the developers and the M&A guys sweating it out.

[Paul J. Bradley, Chief Financial Officer]

Yes. And I'll just add to it that there's a couple of things that go on. As Mike mentioned, the lumpiness, and a lot of that has to do also with milestones payments that are just triggered either by time or events. But the other reality of it is that as we do have a little bit of ability to say hey, if we are having a tougher year on something like the wind, we can, say, maybe we'll just push off a couple of activities for a couple of months at the end of the year and push them into '19. I mean just to be truthful, we do have a little bit of capability there. We don't tend to like to use that lever more than we have to because obviously we want to develop the business to run itself somewhat with the best optimal spend in mind versus the deliverables. But there is some ability to do that, if I'm just being fully transparent.

[Sean Steuart, Research Analyst]

And just revisiting Gemini and the risk of getting too far into the weeds on our modeling. Is it possible for you to give a sense of how much the better wholesale price environment in the Netherlands mitigated lower-than-normal generation this quarter? How much of an offset was that?

[Paul J. Bradley, Chief Financial Officer]

Well, we'll actually not really be able to tell as much until we see how the production happens at the end of the year. Because you remember, first half of the year were -- or the first 3 quarters of the year, we're collecting the SDE payment. The benefit over last year, because last year we started below the floor, where we do wear some risks when we get below the magic price of I think $44 a megawatt hour. We start to lose that from our SDE contract. So we start off this year not losing that. I think that, I can't recall exactly how much that was -- it was for the project, about EUR 4 million or EUR 5 million, I think, at the beginning of the year. But what happens is the next 2 months are going to be critical, because we're probably about to hit our SDE cap anytime here and then we'll see market prices are robust. So if we have a combination of robust generation and robust pricing in November, December, then we can see quite a substantial offset from any production variance.

[Operator]

Our next question comes from the line of Mark Jarvi with CIBC Capital Markets.

[Mark Thomas Jarvi, Director of Institutional Equity Research]

A couple of questions. Just quickly, while on the topic of Gemini and the cap, give a sense of where you stood at the end of the quarter or are you now, I guess, at the end of October through the cap for the year?

[Paul J. Bradley, Chief Financial Officer]

I think we've got to look at the calculation. I believe we're through it. I don't know exactly what day that sort of happens, but I believe that's sort of toward the end in the last week of October, we -- somewhere in that time frame probably capped down on it.

[Mark Thomas Jarvi, Director of Institutional Equity Research]

Okay. And then just turning to the balance sheet, you talked about funding. Can you maybe just help us triangulate versus the consolidated cash and then mitigate to what NPI your share of unencumbered cash is that you guys have for growth right now?

[Paul J. Bradley, Chief Financial Officer]

I don't know if I follow the question. Sorry, Mark.

[Mark Thomas Jarvi, Director of Institutional Equity Research]

Just maybe there's some cash that's consolidated, but not all to you guys, partners and things like that or held at the asset levels. So just maybe what you guys would view as your sort of available liquidity or unencumbered cash right now you could use to fund new growth?

[Paul J. Bradley, Chief Financial Officer]

Yes, I mean, we look at liquidity to fund growth. It's a little bit unfortunately more complex calculation than that, because we've got availability on our line of credit. We got cash that we can access, and we've also got to deduct up to the max of our line of credit. We actually have the S&P metrics that are BBB stable rating that we have to respect. So with -- unfortunately, it's a lot more complex to get to what sort of dry powder we'd have to deploy. And then the other thing is we do have ability to go into hybrid instruments or something else. But from a pure sort of cash-credit, we're probably somewhere in the $250 million, $300 million world without starting to get our metrics tighter on the S&P rating.

[Mark Thomas Jarvi, Director of Institutional Equity Research]

Yes, that's what I'm looking for. And then still on Taiwan, you guys talked about negotiations for construction contracts and being the turbine supplier. Maybe you can give us some thoughts around having to lock in soon and satisfy some local content versus being more patient and then looking for the cost improvements or technology improvement. When do you guys think you'll actually start to really dial in on making those agreements for those projects?

[Mike Crawley, CEO & President]

So I think the commitments, to be clear, that we have to make are only on 300 megawatts. The total is, like I said, over 1 gigawatt. So the 2 auction projects have no local content obligation. Although what they do allow us to do is get at scale, so there is some opportunity to perhaps optimize the procurement on the 300 megawatts by virtue of the scale that we have with the 2 auction projects as well. We are moving towards the financial close in some point of 2022, probably towards the end of 2022 on the projects. So we would likely need to lock in turbine vendor for the 300 megawatts, at least, prior to submitting a local content plan later in 2019. Perhaps a bit earlier than expected, but quite frankly, in terms of the scale of our projects, we would want to have some certainty around the turbine supply particularly since it's a new market for offshore wind. So I don't think we're terribly uncomfortable locking in a bit earlier than we perhaps would have in Europe or in more mature markets for offshore wind.

[Mark Thomas Jarvi, Director of Institutional Equity Research]

Okay. And then I just want to go back to your comments on Japan. I mean, there was an attempt to get some legislation done earlier in the year, didn't quite happen. They're trying again. Can you give us a sense of either time line and expectations? And whether this -- or when you get a sense or what you're hearing from the market in terms on when you get clarity on whether or not you can move forward in Japan?

[Mike Crawley, CEO & President]

Yes, I mean the -- again, we're a prospect in Japan. We don't have a project there. We think it's an attractive market for -- in terms of scale, in terms of a good place to do business. But we are at a fairly, fairly early stage there. I think from what we've gathered, there's a fair degree of optimism that the legislation will pass. There's already been a round of transmission auction in August, which will be -- the results will be announced sometime early in 2019. So that -- that's the other big pieces moving forward. So I think the general sense that we're picking up is that it is moving forward, and that projects will soon be in a position to start advancing. But it has been slow, no question. It has been slow.

[Operator]

Our next question comes from the line of [ Louis Baker ], who is a private investor.

[Unknown Attendee]

My question relates to growth. I have seen various analysts recently being critical of the hiatus period between 2020 and 2024, which is a period on which you're doing the -- you'll finish Europe and you'll be into the Taiwan completion. There doesn't seem to be any growth in Ontario. What is your comment on that?

[Mike Crawley, CEO & President]

Yes, thanks, [ Louis ], for the question, and thanks for your investment in Northland. So we have taken, I guess, a more decentralized and a more aggressive approach to development going forward. So we have -- we used to run all of the -- our development activities largely out of Toronto, with a small office in London. And part of that was -- because historically, a lot of the development opportunities, as you point out, came in Canada and indeed came from Ontario. In the near-term future, certainly that's not going to be the case. So we have established now a more robust office in London. We target European opportunities. We've established an office in Houston, which is focused on Latin American opportunities, including some onshore renewables and thermal generation projects we're developing in Mexico with a view to marketing that power perhaps directly to end-users, but also looking at transmission opportunities as well through Latin America and other opportunities in select markets. And then we're also establishing an office in Asia, a development office in Asia. We've got an office currently in Seoul, and we have a project office in Taipei. We may establish some form of presence in Tokyo, and collectively, that will form our Asian development office to look for opportunities beyond what we've already realized in Taiwan with the Hai Long projects. So that's how we're putting ourselves in a position to be able to realize more global growth. We pick the markets that we think are going to offer opportunity, and we're making sure that we've got people on the ground in those markets who know those markets that can identify, develop, secure and move projects all the way forward right up to just about up to financial close, at which point then the Toronto project finance team comes in to help close the deals. So those are our development offices. Plus, we still have an office in Toronto which we've reconfigured to focus on Canadian and U.S. opportunities. But I think going forward, you're going to see that office perhaps look at some different types of investments and different types of projects than Northland has done previously in Canada.

[Unknown Attendee]

That's what I see recently announcements by Interpipe, where they bought a very large storage facility in Europe. And that's the type of thing that, I guess, maybe where you think you're going outside of your normal comfort zone. Things like that, I guess, are available. Now what concerns me is your Ontario, where most of your local or Canadian operation is. It doesn't seem that there'll be a lot of future with this government with that. And as far as cost concerns, you don't have escalations, you're just going to run off the contracts and not be able to get the same price going forward. So how are you going to deal with that one on a pretty immediate basis?

[Mike Crawley, CEO & President]

Sure. So I mean the independent system operator in Ontario had identified the need for capacity starting in 2024. So I mean, the development power projects, it's a long cycle. So we're quite aware of that and keeping an eye on it in terms of what kind of opportunities may fit in with that time schedule in Ontario. There's a lot of activity going on, as we spoke about earlier in Alberta and Saskatchewan. Very competitive, but there's a lot of activity that will continue for the next several years as they decarbonize both of those markets, move away from coal-fired generation, more towards more renewable generation. So those opportunities we're pursuing. In terms of the contracts we have in Ontario, we have already announced at our Investor Day that we are creating a more robust power and gas marketing team at Northland, which will allow us to both optimize some of the gas storage and transportation assets that we have related to our power plants. But also, it allows us to look at how perhaps we can market power from existing projects as they come off of contract and also look in other markets, how we could secure better margins on projects, better returns on projects if we can get closer to the customer rather than always going through centralized procurements where returns certainly have been dropping recently. Does that answer your question?

[Unknown Attendee]

The stock is sort of been drifting downwards and downwards, really, with no expectation of growth. So you've got Europe and you've got Taiwan, but the in-between parts, people are concerned about. So like I already referred you, for example, to a Seeking Alpha of -- in August, 5-page report on your company, which you may have seen. That's quite an esteemed bit of literature in terms trying to analyze where the growth is coming from.

[Mike Crawley, CEO & President]

For sure. I mean, certainly, there's no question that the last 2 months has -- there's been some turbulence in the markets, and we're obviously tracking that. I mean, I've got a lot of shares myself, so I track that personally. So it's -- I recognize that -- what's going on the last 2 months. But looking ahead, I mean, the -- these teams that I've spoken about, the development teams, they're not just focused on longer-term opportunities and, they're not just focused on large opportunities like we have in Hai Long. They're also looking at way -- at opportunities that can come online sooner and offer growth in between large projects like Deutsche Bucht and Hai Long. I mean, listen, having big projects like Hai Long and Deutsche Bucht, which are multibillion-dollar investment opportunities, those are obviously excellent opportunities for Northland, and we will continue to pursue those. They have long-term contracts which is attractive to us. But we do recognize that there is some advantage in filling in between those opportunities, and those development teams have been specifically charged with looking for those opportunities.

[Unknown Attendee]

All right. I appreciate your comments, but the stock has drifted for about 2 years now. So I think there's a missing ingredient. And I'm encouraged by what you're saying. I'd be more encouraged by what you're going to perform.

[Mike Crawley, CEO & President]

I appreciate your question.

[Operator]

Mr. Crawley, there are no further questions at this time. I will now turn the call back over to you.

[Mike Crawley, CEO & President]

Okay. Well, thank you to everyone for joining us today. We're going to hold our next call following the release of our fourth quarter results in February 2019.

[Operator]

Ladies and gentlemen, that does conclude the conference call for today. Thank you for participating, and have a pleasant day.