Financial Data and Key Metrics Changes - Q2 adjusted net earnings from continuing operations were $36.2 million, down approximately 13% from $41.5 million in 2024 [11] - Q2 adjusted net earnings per share were $0.04, down from $0.06 in Q2 2024, with operationally flat results excluding one-time items [13] - Net earnings from the Regulated Services Group were essentially flat year over year, with growth from approved rates and reduced interest expense offset by various factors [11] Business Line Data and Key Metrics Changes - The Hydro Group saw a $5.8 million increase in net earnings primarily due to a one-time tax recovery finalized in Q1 [12] - The corporate side's adjusted net earnings decreased by $10.2 million mainly due to the removal of Atlantica dividends [12] Market Data and Key Metrics Changes - A total combined rate adjustment request of $73.6 million was made during the quarter, with notable filings in Arizona Litchfield Park Water and New England Natural Gas [6] - A $4.2 million revenue adjustment was approved for the company's water and wastewater facilities in Arizona, effective July 1 [8] Company Strategy and Development Direction - The company announced a three-year financial outlook focused on improving customer outcomes, driving operational efficiencies, and achieving constructive regulatory outcomes [7] - The company aims to become a premium pure play regulated utility, emphasizing investments in local communities and economic development [10] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in navigating challenges and investing wisely in infrastructure for stakeholder benefit [14] - The management team is focused on cost discipline and operational efficiencies, with ongoing efforts to lower the overall cost profile [31] Other Important Information - The company is actively developing targeted investment plans aimed at driving economic progress across its service areas [10] - The executive management team has been strengthened with new appointments, enhancing the company's commitment to operational excellence [6] Q&A Session Summary Question: Anticipation of a portfolio update this year - Management confirmed a strategy update on the portfolio will be provided at the end of the year, with plans to attend the EEI financial conference in November [21] Question: Details on investment plans for economic progress - Management indicated that they are signaling their role as a utility in economic development and are engaging in conversations with states regarding this [23] Question: Updates on tax recoveries in the hydro business - Management stated that the majority of tax adjustments related to hydro were taken in Q1, with no further updates expected [26] Question: Additional hires for ongoing rate cases - Management mentioned that they are constantly evaluating if they have the right skills in place but will announce any new hires as they occur [28] Question: Progress on cost reduction plans - Management noted that efforts are underway, but specific outcomes will not be disclosed until they are reflected in quarterly results [31] Question: Update on hydro asset monetization - Management confirmed there are no updates on the process to potentially monetize hydro assets at this time [33] Question: Stakeholder engagement in Empire Electric proceedings - Management indicated that negotiations with stakeholders are ongoing, with timelines dependent on procedural schedules [38]

Core Insights - Algonquin Power & Utilities reported quarterly earnings of $0.04 per share, matching the Zacks Consensus Estimate, but down from $0.09 per share a year ago [1] - The company posted revenues of $527.8 million for the quarter, missing the Zacks Consensus Estimate by 0.44% and down from $598.63 million year-over-year [2] - The stock has increased approximately 33% since the beginning of the year, outperforming the S&P 500's gain of 7.8% [3] Earnings Performance - The company has surpassed consensus EPS estimates only once in the last four quarters [1][2] - The current consensus EPS estimate for the upcoming quarter is $0.06, with expected revenues of $592.18 million, and for the current fiscal year, the estimate is $0.31 on $2.42 billion in revenues [7] Market Outlook - The earnings outlook and estimate revisions trend for Algonquin Power & Utilities were favorable ahead of the earnings release, resulting in a Zacks Rank 2 (Buy) for the stock [6] - The Utility - Electric Power industry is currently in the top 35% of Zacks industries, indicating a positive outlook for stocks within this sector [8]

Financial Performance - AQN's Net Earnings decreased by 90% to $17.4 million, compared to $180.1 million in the same period of the previous year[24] - AQN Adjusted Net Earnings decreased by 13% to $36.2 million, compared to $41.5 million in the same period of the previous year[24] - Adjusted Net Earnings per share decreased by 33% to $0.04, compared to $0.06 in the same period of the previous year[24] - Dividends per share declared to common shareholders decreased by 40% to $0.0650, compared to $0.1085 in the same period of the previous year[24] Rate Case Updates - BELCO was authorized an increase of $33.6 million out of a rate request of $59.1 million, implemented retroactively to Jan 1, 2024[38] - Granite State Electric was authorized an increase of $5.5 million out of a rate request of $15.5 million, implemented on April 1, 2025[38] - Midstates Gas in Missouri was authorized an increase of $9.1 million out of a rate request of $13.2 million, implemented on Jan 8, 2025[38] - Missouri Water was authorized an increase of $6.2 million out of a rate request of $8.1 million, implemented on Mar 1, 2025[38] - Various Water & Wastewater in Arizona was authorized an increase of $4.2 million out of a rate request of $6.0 million, implemented on July 1, 2025[38] Key Credit Adjustment Figures - S&P and Fitch selected debt adjustments include a deduction of $700 million for equity credit (50% of $1.4 billion hybrids) and $300 million for Empire securitization, with an addition of $90 million for preferred equity (50% of $180 million)[34] - Q2 debt stands at $6.3 billion[34]

Revenue and Earnings - Revenue for the three months ended June 30, 2025, was $527.8 million, a 2.4% increase from $515.3 million in the same period of 2024[2] - Regulated natural gas distribution revenue increased by 15.5% to $109.0 million in Q2 2025, compared to $94.2 million in Q2 2024[2] - Operating income for the six months ended June 30, 2025, was $243.7 million, up 6.0% from $229.1 million in the same period of 2024[2] - Net earnings attributable to shareholders decreased to $24.1 million in Q2 2025 from $200.7 million in Q2 2024, reflecting a significant decline[2] - Basic and diluted net earnings per share from continuing operations dropped to $0.02 in Q2 2025, compared to $0.26 in Q2 2024[2] - Comprehensive income attributable to shareholders was $36.2 million for Q2 2025, compared to $240.1 million in Q2 2024[3] - Net earnings from continuing operations attributable to common shareholders for Q2 2025 were $14.8 million, compared to $177.4 million in Q2 2024, representing a decrease of approximately 91.66%[56] - Net earnings attributable to common shareholders for the six months ended June 30, 2025, were $112.8 million, compared to $123.3 million for the same period in 2024, a decrease of about 8.12%[56] Assets and Liabilities - Total assets as of June 30, 2025, were $13,693.4 million, down from $16,961.7 million as of December 31, 2024[4] - Long-term debt decreased to $6,020.6 million as of June 30, 2025, from $6,207.0 million at the end of 2024[5] - Cash and cash equivalents increased to $54.3 million as of June 30, 2025, compared to $34.8 million at the end of 2024[4] - As of June 30, 2025, total equity for Algonquin Power & Utilities Corp. was $5,126.2 million, a decrease from $5,149.6 million as of March 31, 2025[6] - The total deficit increased to $(2,915.1) million as of June 30, 2025, from $(2,886.2) million as of March 31, 2025[6] - The balance of common shares as of June 30, 2025, was $7,400.1 million, reflecting an increase from $7,398.6 million as of March 31, 2025[6] Cash Flow and Investments - Cash provided by operating activities for the six months ended June 30, 2025, was $326.4 million, a decrease from $366.9 million in the same period of 2024[14] - The cash balance at the end of the period on June 30, 2025, was $82.6 million, down from $147.5 million at the end of June 30, 2024[15] - Long-term investments increased to $215.0 million as of June 30, 2025, up from $67.8 million at the end of 2024, reflecting a significant growth in investment value[35] - Income from long-term investments for the three months ended June 30, 2025, was $6.7 million, compared to $193.7 million for the same period in 2024, indicating a decrease in investment gains[36] Regulatory and Operational Highlights - Regulatory assets totaled $1,355.7 million as of June 30, 2025, compared to $1,321.0 million as of December 31, 2024, with significant components including securitized costs of $275.1 million and deferred capitalized costs of $211.6 million[32] - AQN's regulatory liabilities amounted to $620.1 million as of June 30, 2025, down from $636.3 million as of December 31, 2024[32] - The Company completed the sale of its renewable energy business (excluding hydro) on January 8, 2025, which has been classified as discontinued operations[26] - The company is transitioning to a premium pure-play utility, incurring one-time costs related to this restructuring strategy[53] Expenses and Costs - Cash dividends on common shares for the six months ended June 30, 2025, totaled $100.5 million, compared to $150.7 million in the same period of 2024, indicating a reduction of approximately 33%[14] - The company reported cash paid for interest expense of $160.8 million for the six months ended June 30, 2025, compared to $206.4 million in the same period of 2024[15] - The company recorded a total interest expense of $67.8 million for the three months ended June 30, 2025, compared to $93.2 million for the same period in 2024, reflecting a decrease in interest costs[46] - Restructuring costs for Q2 2025 amounted to $6.8 million, slightly higher than $6.0 million in Q2 2024, with total restructuring costs for the six months reaching $12.4 million compared to $10.4 million last year[52][53] Foreign Exchange and Risk Management - The company reported a loss on foreign exchange of $14.0 million in Q2 2025, compared to a gain of $2.1 million in Q2 2024, indicating a significant negative shift in foreign exchange impact[60] - The Company employs risk management strategies to mitigate financial risks, using derivative financial instruments to manage exposures to fluctuations in exchange rates, interest rates, and commodity prices[83] Discontinued Operations - For the three months ended June 30, 2025, the company reported revenue from discontinued operations of $83.3 million, with an operating loss of $3.6 million[91] - The company recognized an income tax recovery of $10.6 million during the three months ended June 30, 2025, due to the sale of investment tax credits[91] - Cash flows from operating activities for discontinued operations were $0 million for the three months ended June 30, 2025, compared to $78.3 million in 2024[92]

Group 1 - Algonquin Power & Utilities (AQN) has outperformed its peers in the Utilities sector with a year-to-date return of 34.8%, compared to the sector average of 13.4% [4] - The Zacks Consensus Estimate for AQN's full-year earnings has increased by 8.8% over the past 90 days, indicating improving analyst sentiment [4] - AQN currently holds a Zacks Rank of 2 (Buy), suggesting a favorable outlook for the stock [3] Group 2 - The Utilities group includes 108 companies, with Algonquin Power & Utilities ranked 3 in the Zacks Sector Rank [2] - AQN belongs to the Utility - Electric Power industry, which consists of 59 stocks, and is currently ranked 81 in the Zacks Industry Rank [6] - Stocks in the Utility - Electric Power industry have gained an average of 14.1% this year, indicating AQN's strong performance relative to its industry peers [6] Group 3 - Brookfield Renewable Energy Partners (BEP) is another Utilities stock that has shown strong performance, returning 15.3% year-to-date [5] - The consensus EPS estimate for Brookfield Renewable Energy Partners has increased by 13.8% over the past three months, and it also holds a Zacks Rank of 2 (Buy) [5] - Investors should continue to monitor both Algonquin Power & Utilities and Brookfield Renewable Energy Partners for potential sustained performance [7]

Group 1 - RBC Capital Markets raised the target price for Algonquin Power & Utilities Corp. from $6 to $6.50 while maintaining a "market perform" rating [1] - The company's new "Back to Basics" strategy outlines earnings per share targets before 2027, predicting an 8.5% return on equity and approximately 5% compound annual growth rate [1] - The strategic presentation by Algonquin Power's management exceeded investor expectations, particularly regarding the guidance for the company's outlook before 2027, leading to a nearly 16% stock price increase on June 3 [1] Group 2 - Algonquin Power's "Back to Basics" plan is a key initiative to strengthen its financial foundation and achieve stable growth in the coming years [2] - The company, headquartered in Oakville, Canada, focuses on regulated operations in electricity, water, wastewater, and natural gas systems [2]

Core Viewpoint - Algonquin Power & Utilities (AQN) has received an upgrade to a Zacks Rank 2 (Buy), indicating a positive trend in earnings estimates which is a significant factor influencing stock prices [1][4]. Earnings Estimates and Ratings - The Zacks rating system is primarily based on a company's changing earnings picture, tracking the Zacks Consensus Estimate for EPS from sell-side analysts [2]. - The Zacks rating upgrade reflects an improvement in Algonquin Power & Utilities' earnings outlook, which is expected to positively impact its stock price [4][6]. Impact of Earnings Estimates on Stock Prices - Changes in a company's future earnings potential, as indicated by earnings estimate revisions, are strongly correlated with near-term stock price movements, particularly due to institutional investors' reliance on these estimates for valuation [5]. - Rising earnings estimates and the subsequent rating upgrade suggest an improvement in the underlying business of Algonquin Power & Utilities, which could lead to higher stock prices as investors respond positively [6]. Historical Performance of Zacks Ratings - The Zacks Rank stock-rating system has a strong track record, with Zacks Rank 1 stocks averaging an annual return of +25% since 1988 [8]. - The Zacks rating system maintains a balanced distribution of "buy" and "sell" ratings, ensuring that only the top 20% of stocks receive a "Strong Buy" or "Buy" rating, indicating superior earnings estimate revisions [10][11]. Recent Earnings Estimate Revisions - For the fiscal year ending December 2025, Algonquin Power & Utilities is expected to earn $0.31 per share, unchanged from the previous year, but the Zacks Consensus Estimate has increased by 8.8% over the past three months [9].

Company Performance - Algonquin Power & Utilities (AQN) has returned 32.1% year-to-date, significantly outperforming the average gain of 8.8% in the Utilities sector [4] - The Zacks Consensus Estimate for AQN's full-year earnings has increased by 8.8% over the past quarter, indicating improving analyst sentiment [4] - AQN currently holds a Zacks Rank of 2 (Buy), suggesting a favorable outlook for the stock [3] Industry Context - The Utilities group, which includes AQN, ranks 1 within the Zacks Sector Rank, reflecting strong performance among its 109 companies [2] - AQN belongs to the Utility - Electric Power industry, which consists of 60 companies and currently ranks 90 in the Zacks Industry Rank, with an average gain of 8.7% year-to-date [6] - Another outperforming stock in the Utilities sector is Koninklijke KPN NV (KKPNF), which has returned 32.7% year-to-date and also holds a Zacks Rank of 2 (Buy) [5][7]

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