Core Points - Algonquin Power & Utilities Corp. (APUC) announced the pricing of $500 million of 5.577% senior notes due January 31, 2029, and $350 million of 5.869% senior notes due January 31, 2034 [1][2] - The net proceeds from the sale of the notes will be used to repay indebtedness and for other general corporate purposes [1] - The offering is expected to close on January 12, 2024, subject to customary closing conditions [2] Financial Details - The 2029 Notes were priced at 99.996% of their face value, while the 2034 Notes were priced at 99.995% of their face value [2] - The notes are unsecured and rank equally with existing and future unsecured indebtedness of Liberty Utilities [2] Company Overview - APUC is a diversified international utility with approximately $18 billion in total assets, providing energy and water solutions to over one million customer connections [5] - The company operates over 4 GW of installed renewable energy capacity [5]

[Unaudited Interim Consolidated Financial Statements](index=1&type=section&id=Unaudited%20Interim%20Consolidated%20Financial%20Statements) [Interim Consolidated Statements of Operations](index=2&type=section&id=Interim%20Consolidated%20Statements%20of%20Operations) For the nine months ended September 30, 2023, Algonquin Power & Utilities Corp. reported a net loss attributable to common shareholders of $163.9 million, or ($0.24) per share, compared to a net loss of $144.2 million, or ($0.21) per share, in the prior year period, driven by higher interest expenses and significant other net losses despite a slight increase in total revenue Consolidated Statement of Operations Highlights (Nine Months Ended Sep 30) | Metric (in thousands of U.S. dollars) | 2023 | 2022 | | :--- | :--- | :--- | | **Total Revenue** | **$2,031,236** | **$2,017,063** | | Operating Income | $369,547 | $379,182 | | Loss Before Income Taxes | ($285,103) | ($249,942) | | Net Loss | ($200,037) | ($217,059) | | Net Loss Attributable to Common Shareholders | ($163,930) | ($144,227) | | **Basic and Diluted Net Loss Per Share** | **($0.24)** | **($0.21)** | - For the third quarter of 2023, the company reported a net loss per share of **($0.26)**, an improvement from the **($0.29)** loss per share in Q3 2022, primarily due to a smaller loss from long-term investments compared to the prior-year quarter[2](index=2&type=chunk) [Unaudited Interim Consolidated Statements of Comprehensive Income (Loss)](index=3&type=section&id=Unaudited%20Interim%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company recorded a comprehensive loss attributable to shareholders of $107.3 million for the nine months ended September 30, 2023, a significant improvement from the $261.0 million comprehensive loss in the same period of 2022, primarily due to a positive change in the fair value of cash flow hedges Comprehensive Income (Loss) (Nine Months Ended Sep 30) | Metric (in thousands of U.S. dollars) | 2023 | 2022 | | :--- | :--- | :--- | | Net Loss | ($200,037) | ($217,059) | | Other Comprehensive Income (Loss), net of tax | $50,577 | ($125,889) | | **Comprehensive Loss** | **($149,460)** | **($342,948)** | | Comprehensive Loss Attributable to Shareholders | ($107,267) | ($261,031) | [Unaudited Interim Consolidated Balance Sheets](index=4&type=section&id=Unaudited%20Interim%20Consolidated%20Balance%20Sheets) As of September 30, 2023, total assets increased slightly to $18.0 billion from $17.6 billion at year-end 2022, driven by an increase in property, plant, and equipment, while total liabilities also grew to $11.4 billion from $10.8 billion, primarily due to a rise in long-term debt, resulting in a decrease in total equity from $6.8 billion to $6.5 billion Balance Sheet Summary (as of Sep 30, 2023 vs Dec 31, 2022) | Metric (in thousands of U.S. dollars) | Sep 30, 2023 | Dec 31, 2022 | | :--- | :--- | :--- | | **Total Assets** | **$17,982,766** | **$17,627,613** | | Property, plant and equipment, net | $12,449,278 | $11,944,885 | | Long-term investments | $1,573,368 | $1,806,532 | | **Total Liabilities** | **$11,440,163** | **$10,791,174** | | Long-term debt (including current portion) | $8,367,096 | $7,512,017 | | **Total Equity** | **$6,542,603** | **$6,836,439** | [Unaudited Interim Consolidated Statement of Equity](index=6&type=section&id=Unaudited%20Interim%20Consolidated%20Statement%20of%20Equity) For the nine months ended September 30, 2023, total equity decreased by approximately $294 million to $6.54 billion, primarily driven by a net loss of $200 million and dividends declared of $243 million, partially offset by contributions from non-controlling interests and positive other comprehensive income Changes in Total Equity (Nine Months Ended Sep 30, 2023) | Item (in thousands of U.S. dollars) | Amount | | :--- | :--- | | Balance, December 31, 2022 | $6,836,439 | | Net loss | ($200,037) | | Dividends declared and distributions | ($243,340) | | Other comprehensive income (OCI) | $50,577 | | Contributions from non-controlling interests | $107,933 | | **Balance, September 30, 2023** | **$6,542,603** | [Unaudited Interim Consolidated Statements of Cash Flows](index=10&type=section&id=Unaudited%20Interim%20Consolidated%20Statements%20of%20Cash%20Flows) For the nine months ended September 30, 2023, cash from operating activities was $427.3 million, a slight increase from $404.5 million in the prior year, while investing activities used $839.2 million, significantly less than the $1.64 billion used in 2022, and financing activities provided $438.4 million, a sharp decrease from $1.23 billion in 2022 Cash Flow Summary (Nine Months Ended Sep 30) | Cash Flow Activity (in thousands of U.S. dollars) | 2023 | 2022 | | :--- | :--- | :--- | | **Net cash from operating activities** | **$427,304** | **$404,463** | | **Net cash used in investing activities** | **($839,227)** | **($1,637,195)** | | Additions to PP&E and intangibles | ($694,047) | ($897,193) | | Acquisitions of operating entities | $0 | ($632,797) | | **Net cash from financing activities** | **$438,422** | **$1,231,843** | | Increase in long-term debt | $1,787,190 | $2,815,506 | | Repayments of long-term debt | ($1,047,263) | ($1,308,345) | | Cash dividends on common shares | ($247,005) | ($281,922) | [Notes to the Unaudited Interim Consolidated Financial Statements](index=12&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Consolidated%20Financial%20Statements) [Note 1: Significant accounting policies](index=12&type=section&id=1.%20Significant%20accounting%20policies) The financial statements are prepared in accordance with U.S. GAAP, with accounting policies consistent with those from the year-ended December 31, 2022, and the company's operating results are subject to seasonal fluctuations across its electric, gas, and water utilities, as well as its renewable energy assets, with the U.S. dollar as the reporting currency - The company's operations are organized into two primary business units: the Regulated Services Group and the Renewable Energy Group[18](index=18&type=chunk) - Operating results experience seasonal fluctuations, with natural gas demand higher in winter and solar energy generation greater in summer[19](index=19&type=chunk) [Note 3: Business acquisitions](index=13&type=section&id=3.%20Business%20acquisitions) The company terminated its agreement to acquire Kentucky Power Company, resulting in a $46.5 million write-off of related costs in the first nine months of 2023, while completing the acquisition of the remaining 50% of the Deerfield II wind farm for $23.1 million - On April 17, 2023, the agreement to acquire Kentucky Power Company from AEP was mutually terminated[23](index=23&type=chunk) - The company recognized a loss of **$46.5 million** in the nine months ended September 30, 2023, related to the write-off of costs from the terminated Kentucky Power Transaction[23](index=23&type=chunk) - On June 15, 2023, the company acquired the remaining 50% of the Deerfield II wind farm for **$23.1 million**[23](index=23&type=chunk) [Note 5: Regulatory matters](index=14&type=section&id=5.%20Regulatory%20matters) The company's regulated utilities operate under cost-of-service regulation, with recently completed proceedings including a revenue increase for CalPeco Electric System and St. Lawrence Gas, and a significant MPSC order for Empire Electric that authorized securitization of costs from a 2021 winter storm and the Asbury plant retirement, but resulted in a one-time net loss of $63.5 million due to disallowed costs - Empire Electric received an order to securitize approximately **$290.4 million** in costs related to the Midwest Extreme Weather Event and the Asbury plant retirement, but the exclusion of certain costs resulted in a one-time net loss of **$63.5 million** (**$48.5 million** net of tax)[29](index=29&type=chunk) Regulatory Assets and Liabilities (as of Sep 30, 2023) | Category (in thousands of U.S. dollars) | Amount | | :--- | :--- | | **Total regulatory assets** | **$1,284,878** | | *Key Asset: Fuel and commodity cost adjustments* | *$333,813* | | **Total regulatory liabilities** | **$682,272** | | *Key Liability: Income taxes* | *$297,549* | [Note 6: Long-term investments](index=16&type=section&id=6.%20Long-term%20investments) The company's long-term investments are dominated by its holding in Atlantica, carried at fair value, and for the nine months ended September 30, 2023, the company recognized a total loss of $258.7 million from long-term investments, primarily driven by a $352.8 million fair value loss on these investments, with the Atlantica holding being the main contributor, and the company also has significant commitments and maximum exposure of over $1 billion related to its Variable Interest Entities (VIEs) Loss from Long-Term Investments (Nine Months Ended Sep 30) | Category (in thousands of U.S. dollars) | 2023 | 2022 | | :--- | :--- | :--- | | Fair value loss on investments | ($352,824) | ($484,387) | | Dividend and interest income | $76,565 | $80,597 | | Equity method loss & other | $17,606 | ($52) | | **Total Loss from Long-Term Investments** | **($258,653)** | **($403,842)** | - The fair value of the investment in Atlantica decreased from **$1.27 billion** at year-end 2022 to **$935.2 million** as of September 30, 2023[34](index=34&type=chunk) - The company's maximum exposure related to its Variable Interest Entities (VIEs), including carrying amount, loans, and guarantees, was approximately **$1.0 billion** as of September 30, 2023[42](index=42&type=chunk) [Note 7: Long-term debt](index=19&type=section&id=7.%20Long-term%20debt) Total long-term debt increased to $8.37 billion as of September 30, 2023, from $7.51 billion at the end of 2022, primarily due to higher drawings on senior unsecured revolving credit facilities, while total liquidity and capital reserves decreased significantly from $2.35 billion to $1.45 billion over the same period, and subsequent to the quarter, the company extended maturities on certain credit facilities and redeemed $287.5 million of subordinated notes Long-Term Debt Composition (as of Sep 30, 2023) | Borrowing Type (in thousands of U.S. dollars) | Amount | | :--- | :--- | | Senior unsecured revolving credit facilities | $1,334,516 | | Senior unsecured notes (Green Equity Units) | $1,144,376 | | Senior unsecured notes | $1,406,963 | | Subordinated unsecured notes | $1,657,196 | | Other Debt | $2,824,045 | | **Total Long-Term Debt** | **$8,367,096** | - Total liquidity and capital reserves stood at **$1.45 billion** as of September 30, 2023, a decrease from **$2.35 billion** at December 31, 2022[47](index=47&type=chunk) - Subsequent to quarter-end, the company redeemed all **$287.5 million** of its 6.875% fixed-to-floating subordinated notes[48](index=48&type=chunk) [Note 10: Shareholders' capital](index=22&type=section&id=10.%20Shareholders%27%20capital) The company's common shares outstanding increased to 689.0 million as of September 30, 2023, with the Dividend Reinvestment Plan (DRIP) suspended effective March 16, 2023, and participating shareholders now receiving cash dividends, while share-based compensation expense for the first nine months of 2023 was $7.8 million - The company suspended its dividend reinvestment plan (DRIP) effective March 16, 2023, with shareholders previously enrolled beginning to receive cash dividends starting with the Q1 2023 dividend[58](index=58&type=chunk) - No common shares were issued under the at-the-market (ATM) equity program during the nine months ended September 30, 2023[57](index=57&type=chunk) - Total share-based compensation expense was **$7.8 million** for the nine months ended September 30, 2023, up from **$6.6 million** in the prior-year period[58](index=58&type=chunk) [Note 12: Dividends](index=25&type=section&id=12.%20Dividends) The company declared a common share dividend of $0.1085 per share for the third quarter of 2023, and for the first nine months of 2023, total common dividends were $0.3255 per share, a significant reduction from $0.5322 per share in the same period of 2022, reflecting the company's previously announced dividend cut Dividends Declared Per Common Share | Period | 2023 | 2022 | | :--- | :--- | :--- | | Three months ended Sep 30 | $0.1085 | $0.1808 | | Nine months ended Sep 30 | $0.3255 | $0.5322 | [Note 16: Other net losses](index=28&type=section&id=16.%20Other%20net%20losses) The company recorded significant other net losses of $119.0 million for the nine months ended September 30, 2023, a substantial increase from $19.3 million in the prior year, with key drivers including a $63.5 million securitization write-off for Empire Electric, $46.5 million in costs from the terminated Kentucky Power acquisition, and $7.6 million in costs related to the planned sale of the renewable energy business Other Net Losses (Nine Months Ended Sep 30, 2023) | Item (in thousands of U.S. dollars) | Amount | | :--- | :--- | | Securitization write-off | $63,495 | | Kentucky termination costs | $46,527 | | Renewable energy business sale costs | $7,557 | | Other | $13,419 | | Acquisition-related settlement payment (Gain) | ($11,983) | | **Total Other Net Losses** | **$119,015** | - The company announced it is pursuing a sale of its renewable energy business and incurred **$7.6 million** in related costs during the first nine months of 2023[81](index=81&type=chunk) [Note 18: Segmented information](index=29&type=section&id=18.%20Segmented%20information) The company operates through two segments: Regulated Services Group and Renewable Energy Group, with the Regulated Services Group generating operating income of $358.2 million and the Renewable Energy Group generating $19.2 million for the nine months ended September 30, 2023, and the company has announced its intention to sell the Renewable Energy Group, though it does not yet meet the criteria for 'held for sale' accounting, with the United States remaining the largest source of revenue - The company is pursuing a sale of its Renewable Energy Group business segment[86](index=86&type=chunk) Segment Performance (Nine Months Ended Sep 30, 2023) | Segment (in thousands of U.S. dollars) | Revenue | Operating Income | Property, Plant & Equipment | | :--- | :--- | :--- | :--- | | Regulated Services Group | $1,745,687 | $358,206 | $8,797,756 | | Renewable Energy Group | $214,209 | $19,190 | $3,623,020 | Revenue by Geographic Area (Nine Months Ended Sep 30) | Region (in thousands of U.S. dollars) | 2023 | 2022 | | :--- | :--- | :--- | | United States | $1,635,892 | $1,621,194 | | Canada | $118,474 | $125,986 | | Other regions | $276,870 | $269,883 | | **Total** | **$2,031,236** | **$2,017,063** | [Note 19: Commitments and contingencies](index=34&type=section&id=19.%20Commitments%20and%20contingencies) The company is involved in 18 active lawsuits related to the 2020 Mountain View Fire in its CalPeco Electric territory, the outcome of which cannot be reasonably predicted, and the company has wildfire liability insurance, with total future commitments of approximately $1.85 billion as of September 30, 2023, primarily for power purchases, natural gas supply, and service agreements - The company faces **18 active lawsuits** and one non-litigation claim concerning the Mountain View Fire of November 2020, and intends to vigorously defend these claims with liability insurance[100](index=100&type=chunk) Future Commitments (as of Sep 30, 2023) | Category (in thousands of U.S. dollars) | Total Commitment | | :--- | :--- | | Power purchase | $250,729 | | Natural gas supply and service agreements | $450,121 | | Service agreements | $561,649 | | Land easements and others | $569,115 | | Capital projects | $21,819 | | **Total** | **$1,853,433** | [Note 21: Financial instruments](index=36&type=section&id=21.%20Financial%20instruments) The company uses a variety of derivative financial instruments to manage exposure to interest rate, foreign currency, and commodity price risks, holding derivative assets with a fair value of $112.3 million and derivative liabilities of $127.4 million as of September 30, 2023, and utilizing cash flow hedges, net investment hedges, and other derivatives not designated as hedges, with a significant portion of derivative fair values classified as Level 2 and Level 3, and a supplier financing program with $87.5 million in confirmed invoices outstanding Fair Value of Financial Instruments (as of Sep 30, 2023) | Category (in thousands of U.S. dollars) | Carrying Amount | Fair Value | | :--- | :--- | :--- | | **Financial Assets** | | | | Long-term investments at fair value | $991,593 | $991,593 | | Derivative instruments | $112,328 | $112,328 | | **Financial Liabilities** | | | | Long-term debt | $8,367,096 | $7,425,499 | | Derivative instruments | $127,420 | $127,420 | - The company expects **$25.2 million** of unrealized losses currently in Accumulated Other Comprehensive Income (AOCI) to be reclassified into earnings within the next 12 months as underlying hedged transactions settle[117](index=117&type=chunk) - The company has a supplier financing program where suppliers can sell their receivables, and as of September 30, 2023, accounts payable included **$87.5 million** of confirmed invoices under this program, up from **$16.8 million** at year-end 2022[126](index=126&type=chunk)

Algonquin Power & Utilities Corp. (NYSE:AQN) Q3 2023 Earnings Conference Call November 10, 2023 8:30 AM ET Company Participants Brian Chin - Vice President, Investor Relations Christopher Huskilson - Interim Chief Executive Officer Darren Myers - Chief Financial Officer Jeffery Norman - Chief Development Officer Conference Call Participants Sean Steuart - TD Securities Nelson Ng - RBC Capital Markets Dariusz Lozny - Bank of America Rupert Merer - National Bank Jessica Hoyle - Scotiabank David Quezada - Raym ...

Financial Data and Key Metrics Changes - The second quarter revenue increased by 1% year-on-year to $627.9 million, primarily due to the implementation of new rates, offset by unfavorable weather [20][22] - Consolidated adjusted EBITDA for the second quarter was $277.7 million, a decline of approximately 4% from the same period last year [20] - Adjusted net earnings were $56.2 million, and adjusted earnings per share were $0.08, both representing a year-over-year decline of approximately 50% [22] Business Line Data and Key Metrics Changes - The Regulated Services Group delivered $214.4 million in divisional operating profit in the second quarter, a year-on-year increase of 15% [20][21] - The Renewable Energy Group's divisional operating profit was $90.6 million, a year-on-year reduction of 26%, primarily due to lower wind production and decreased HLBV income [21][22] Market Data and Key Metrics Changes - The regulated utility business serves over 1.2 million customer connections with a $7 billion rate base, concentrated in four U.S. states [10][11] - The renewable portfolio has approximately 2.7 gigawatts of gross generating capacity across 46 facilities, operating in 11 states and six provinces [13][14] Company Strategy and Development Direction - The company plans to pursue a sale of its Renewable Energy Group to focus on its regulated utility business, which is expected to create more long-term value [7][9] - The strategy includes investing approximately $1 billion of capital per year in the regulated business, focusing on standardizing infrastructure to improve reliability and customer affordability [12][15] - The company aims to maintain its investment-grade BBB credit rating while supporting its current dividend through the remaining regulated business [9][15] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a challenging quarter due to unfavorable weather and higher interest rates impacting financial results [15][20] - The company expects annual adjusted net EPS growth over time to be in the 4% to 7% range, consistent with industry standards [13][22] Other Important Information - The company has engaged JPMorgan as a financial advisor for the sale of the renewable business, with the timing of the sale dependent on achieving appropriate value [9][38] - The development pipeline for the renewable business includes over six gigawatts of solar and wind projects, with significant portions already in interconnection queues [14][43] Q&A Session Summary Question: Can you comment on the planned renewable sale and valuations? - Management indicated that they have analyzed market conditions and believe their portfolio has strong value, with proceeds aimed at reducing debt and buying back shares [25][27] Question: What is the target FFO-to-debt ratio? - Management stated that the FFO-to-debt ratio would decrease as a pure play regulated business, allowing for more liquidity to invest approximately $1 billion annually [31][32] Question: What are the implications for the dividend payout ratio? - Management expects a high payout ratio in the near term but aims to align it with industry standards in the long term [40] Question: How important is the development platform in the sale process? - Management believes the development platform will be attractive to potential buyers, with significant projects already under construction [42][43] Question: What will be the use of proceeds from the sale of the renewable business? - Proceeds will primarily be used to strengthen the balance sheet, focusing on maintaining a BBB credit rating and supporting growth in the regulated business [79][80]

Q2 2023 Earnings Conference Call August 10, 2023 8:30 a.m. ET Forward-Looking Statements Certain written statements included herein and/or oral statements made in connection with the presentation contained herein constitute “forward-looking information” within the meaning of applicable securities laws in each of the provinces and territories of Canada and the respective policies, regulations and rules under such laws and “forward-looking statements” within the meaning of the U.S. Private Securities Litigati ...

[Unaudited Interim Consolidated Financial Statements](index=1&type=section&id=Unaudited%20Interim%20Consolidated%20Financial%20Statements) [Interim Consolidated Statements of Operations](index=2&type=section&id=Interim%20Consolidated%20Statements%20of%20Operations) AQN reported a significant increase in net loss for Q2 2023, primarily due to long-term investment losses, while six-month net earnings attributable to shareholders declined Consolidated Statements of Operations Highlights (in thousands of U.S. dollars, except per share amounts) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Total Revenue** | $627,871 | $619,385 | $1,406,498 | $1,352,622 | | **Operating Income** | $93,714 | $107,035 | $236,188 | $244,281 | | **Loss from Long-term Investments** | ($277,696) | ($113,380) | ($57,684) | ($124,069) | | **Net Loss** | ($262,321) | ($62,322) | ($12,711) | ($9,724) | | **Net (Loss) Earnings Attributable to Shareholders** | ($253,231) | ($33,387) | $16,908 | $57,578 | | **Basic and Diluted Net (Loss) Earnings Per Share** | ($0.37) | ($0.05) | $0.02 | $0.08 | [Interim Consolidated Statements of Comprehensive Income (Loss)](index=3&type=section&id=Interim%20Consolidated%20Statements%20of%20Comprehensive%20Income%20(Loss)) The company reported a significantly increased comprehensive loss for Q2 2023, primarily due to OCI volatility, while the six-month period saw a reversal to comprehensive income Comprehensive Income (Loss) Summary (in thousands of U.S. dollars) | Metric | Three Months Ended June 30, 2023 | Three Months Ended June 30, 2022 | Six Months Ended June 30, 2023 | Six Months Ended June 30, 2022 | | :--- | :--- | :--- | :--- | :--- | | **Net Loss** | ($262,321) | ($62,322) | ($12,711) | ($9,724) | | **Other Comprehensive Income (Loss), net of tax** | $35,728 | ($61,412) | $68,538 | ($112,446) | | **Comprehensive (Loss) Income** | ($226,593) | ($123,734) | $55,827 | ($122,170) | | **Comprehensive (Loss) Income Attributable to Shareholders** | ($217,900) | ($93,359) | $85,234 | ($54,115) | [Interim Consolidated Balance Sheets](index=4&type=section&id=Interim%20Consolidated%20Balance%20Sheets) Total assets remained stable at $17.97 billion, while total liabilities increased to $11.14 billion, primarily due to higher long-term debt Balance Sheet Highlights (in thousands of U.S. dollars) | Account | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Total Current Assets** | $1,048,996 | $1,094,481 | | **Total Assets** | $17,968,713 | $17,627,613 | | **Total Current Liabilities** | $1,471,480 | $1,534,460 | | **Total Long-Term Debt** | $7,569,344 | $7,088,743 | | **Total Liabilities** | $11,133,247 | $10,791,150 | | **Total Equity** | $6,835,466 | $6,836,439 | [Interim Consolidated Statement of Equity](index=6&type=section&id=Interim%20Consolidated%20Statement%20of%20Equity) Total equity remained stable at $6.84 billion, with OCI gains largely offset by net loss attributable to non-controlling interests and dividends Statement of Equity Reconciliation - Six Months Ended June 30, 2023 (in thousands of U.S. dollars) | Item | Amount | | :--- | :--- | | **Balance, December 31, 2022** | $6,836,439 | | Net Earnings (Loss) | ($12,711) | | Other Comprehensive Income (OCI) | $68,538 | | Dividends declared and distributions | ($157,969) | | Contributions from non-controlling interests | $107,933 | | Share issuances and other | ($4,764) | | **Balance, June 30, 2023** | $6,835,466 | [Interim Consolidated Statements of Cash Flows](index=10&type=section&id=Interim%20Consolidated%20Statements%20of%20Cash%20Flows) Operating cash flow slightly decreased, while investing activities significantly reduced cash usage, and financing activities provided less cash compared to the prior year Cash Flow Summary - Six Months Ended June 30 (in thousands of U.S. dollars) | Cash Flow Category | 2023 | 2022 | | :--- | :--- | :--- | | **Operating Activities** | $294,677 | $301,558 | | **Investing Activities** | ($494,568) | ($1,314,533) | | **Financing Activities** | $228,518 | $981,721 | | **Net Increase (Decrease) in Cash** | $29,499 | ($33,100) | [Notes to the Unaudited Interim Consolidated Financial Statements](index=11&type=section&id=Notes%20to%20the%20Unaudited%20Interim%20Consolidated%20Financial%20Statements) [Note 3: Business Acquisition](index=12&type=section&id=Note%203.%20Business%20acquisition) This note details the termination of the Kentucky Power acquisition, resulting in a $46.5 million loss, and the acquisition of the remaining 50% of the Deerfield II wind farm [Kentucky Power Company Acquisition Termination](index=12&type=section&id=3(a)%20Kentucky%20Power%20Company%20and%20AEP%20Kentucky%20Transmission%20Company,%20Inc.) The company terminated its agreement to acquire Kentucky Power Company, resulting in a $46.5 million loss from the write-off of transaction costs - The company terminated its agreement to acquire Kentucky Power Company on April 17, 2023[23](index=23&type=chunk) - A loss of **$46.5 million** was recognized for the six months ended June 30, 2023, due to the write-off of costs related to the terminated transaction[23](index=23&type=chunk) [Acquisition of Deerfield II Wind Facility](index=12&type=section&id=3(b)%20Acquisition%20of%20Deerfield%20II%20Wind%20Facility) AQN acquired the remaining 50% of the Deerfield II wind farm for $23.1 million, followed by additional funding from tax equity investors - Acquired the remaining **50%** of the Deerfield II wind farm for **$23.1 million** on June 15, 2023[24](index=24&type=chunk) [Note 5: Regulatory Matters](index=13&type=section&id=Note%205.%20Regulatory%20matters) The company is involved in several regulatory proceedings, including rate increases for CalPeco Electric and St. Lawrence Gas, and a potential $45 million loss for Empire Electric - CalPeco Electric System (California) received final approval for a revenue increase of **$26,979,000**, with new rates effective June 2023 and retroactive to January 2022[30](index=30&type=chunk) - St. Lawrence Gas (New York) was authorized for a revenue increase of **$5,249,000** to be implemented over three years, effective July 1, 2023[30](index=30&type=chunk) - Empire Electric (Missouri) may incur a one-time net loss of approximately **$45,000,000** related to a securitization order if it does not pursue further appeals[30](index=30&type=chunk) [Note 6: Long-Term Investments](index=15&type=section&id=Note%206.%20Long-term%20investments) Long-term investments decreased to $1.72 billion, primarily due to a fair value loss on Atlantica, contributing to a $57.7 million total loss from investments Long-Term Investment Breakdown (in thousands of U.S. dollars) | Investment Type | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Investments carried at fair value (incl. Atlantica) | $1,213,718 | $1,344,207 | | Other long-term investments (incl. equity-method) | $507,045 | $462,325 | | **Total** | **$1,720,763** | **$1,806,532** | Loss from Long-Term Investments (in thousands of U.S. dollars) | Component | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Fair value loss on investments | ($311,410) | ($132,026) | | Dividend and interest income | $26,616 | $54,272 | | Other long-term investments income | $7,098 | $20,070 | | **Total Loss from Long-Term Investments** | **($277,696)** | **($57,684)** | [Note 7: Long-Term Debt](index=18&type=section&id=Note%207.%20Long-term%20debt) Total long-term debt increased to $8.08 billion due to higher credit facility draws, leading to a rise in interest expense and a decrease in available liquidity Long-Term Debt Summary (in thousands of U.S. dollars) | Category | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | Senior unsecured revolving credit facilities | $801,929 | $351,786 | | Total Long-Term Debt (including current portion) | $8,083,147 | $7,512,017 | | **Total Liquidity and Capital Reserves** | **$1,859,158** | **$2,346,330** | - Interest expense for the six months ended June 30, 2023, increased to **$171.6 million** from **$122.5 million** in the same period of 2022, largely due to higher costs on commercial paper and credit facility draws[50](index=50&type=chunk) [Note 10: Shareholders' Capital](index=21&type=section&id=Note%2010.%20Shareholders'%20capital) Common shares outstanding increased to 688.8 million, with the dividend reinvestment plan suspended and $3.9 million in share-based compensation expense recorded - The dividend reinvestment plan (DRIP) was suspended effective March 16, 2023, with dividends to be paid only in cash while suspended[58](index=58&type=chunk) - During the six months ended June 30, 2023, the company issued **4,370,289** common shares under the DRIP before its suspension[58](index=58&type=chunk) - As of June 30, 2023, total unrecognized compensation costs related to non-vested share-based awards were **$39.5 million**, expected to be recognized over **2.27 years**[58](index=58&type=chunk) [Note 12: Dividends](index=24&type=section&id=Note%2012.%20Dividends) The company declared a reduced quarterly dividend of $0.1085 per common share, reflecting an earlier announced dividend cut Common Share Dividends Declared | Period | Dividend per Share (USD) | | :--- | :--- | | **Three Months Ended June 30, 2023** | $0.1085 | | **Three Months Ended June 30, 2022** | $0.1808 | | **Six Months Ended June 30, 2023** | $0.2170 | | **Six Months Ended June 30, 2022** | $0.3514 | [Note 18: Segmented Information](index=29&type=section&id=Note%2018.%20Segmented%20information) AQN's Regulated Services Group was the primary performance driver, and the company announced its intention to sell the Renewable Energy Group - On August 10, 2023, the company announced that it will pursue a sale of the Renewable Energy Group following a strategic review[85](index=85&type=chunk) Segment Performance - Six Months Ended June 30, 2023 (in thousands of U.S. dollars) | Segment | Revenue | Operating Income | | :--- | :--- | :--- | | **Regulated Services Group** | $1,206,394 | $235,289 | | **Renewable Energy Group** | $150,410 | $11,816 | | **Corporate** | — | ($10,917) | | **Total** | **$1,356,804** | **$236,188** | Total Assets by Segment (in thousands of U.S. dollars) | Segment | June 30, 2023 | December 31, 2022 | | :--- | :--- | :--- | | **Regulated Services Group** | $12,247,694 | $12,109,575 | | **Renewable Energy Group** | $5,401,782 | $5,251,933 | | **Corporate** | $319,237 | $266,105 | | **Total** | **$17,968,713** | **$17,627,613** | [Note 19: Commitments and Contingencies](index=33&type=section&id=Note%2019.%20Commitments%20and%20contingencies) The company faces ongoing litigation related to the 2020 Mountain View Fire and has significant future commitments totaling approximately $1.97 billion - The company is a defendant in **17** active lawsuits related to the November 2020 Mountain View Fire; the likelihood of success cannot be predicted, but the company has wildfire liability insurance[98](index=98&type=chunk) Future Commitments as of June 30, 2023 (in thousands of U.S. dollars) | Commitment Type | Total Amount | | :--- | :--- | | Power purchase | $321,954 | | Natural gas supply and service agreements | $479,791 | | Service agreements | $578,685 | | Capital projects | $16,537 | | Land easements and others | $572,507 | | **Total** | **$1,969,474** | [Note 21: Financial Instruments](index=35&type=section&id=Note%2021.%20Financial%20instruments) The company uses various financial instruments, including derivatives, to manage interest rate, foreign exchange, and commodity price risks, with $63.3 million in supplier financing invoices outstanding - The company uses derivative instruments to hedge cash flow variability for natural gas purchases, price risk on power sales, interest rate risk on debt, and foreign currency exposure[108](index=108&type=chunk)[110](index=110&type=chunk)[114](index=114&type=chunk) - The company expects **$19.7 million** of unrealized losses currently in Accumulated Other Comprehensive Income (AOCI) to be reclassified into earnings within the next **12 months** as underlying hedged transactions settle[114](index=114&type=chunk) - Under its supplier financing programs, the company had confirmed invoices of **$63.3 million** included in accounts payable as of June 30, 2023, a significant increase from **$16.8 million** at year-end 2022[121](index=121&type=chunk)

Financial Data and Key Metrics Changes - The consolidated adjusted EBITDA for Q1 2023 was $341 million, up approximately 3% from $330.5 million in the same period last year [14] - Adjusted net earnings for Q1 2023 were $119.9 million, a decrease of 15% compared to $141.2 million reported last year [16] - Adjusted net earnings per share for Q1 2023 were $0.17, down from $0.21 in the prior year [17] - GAAP net earnings increased to $270.1 million from $91 million in Q1 2022, reflecting a significant increase of $179.1 million [17] Business Line Data and Key Metrics Changes - The Regulated Services Group delivered an operating profit of $255.3 million in Q1 2023, compared to $231.2 million in the same quarter last year, marking a 10% increase [14] - The Renewable Energy Group's operating profit for Q1 2023 was $106.5 million, down 10% from $117.9 million in the same quarter last year, primarily due to lower HLBV income [15] Market Data and Key Metrics Changes - The company received final rate case orders at three California facilities, resulting in aggregate annual revenue increases of $29.6 million [10] - The company filed for increased revenues of $39.7 million at its New York Water utility and $7.3 million at its Empire Electric Arkansas utility, indicating ongoing efforts to enhance revenue streams [12][11] Company Strategy and Development Direction - The company initiated a strategic review of its Renewable Energy Group to explore alternatives for maximizing shareholder value, including the potential separation from the Regulated Services Group [6][7] - The company reaffirmed its 2023 adjusted net earnings per share outlook of $0.55 to $0.61 and plans to spend $1 billion in capital expenditures, with $700 million allocated to the Regulated Services Group and $300 million to the Renewable Energy Group [8][17] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenging macroeconomic environment and regulatory uncertainty, which influenced the decision to terminate the Kentucky Power acquisition [9] - The company remains focused on optimizing its balance sheet and does not expect new equity financing through the end of 2024 [18] - Management expressed confidence in the growth potential of both the regulated and renewable businesses, driven by the energy transition [55] Other Important Information - The company has nearly 750 megawatts of wind and solar projects in various stages of construction, expecting to bring approximately 450 megawatts into service throughout 2023 [13] - The strategic review committee has been formed to oversee the review process, which is expected to conclude by the second quarter earnings call [7] Q&A Session Summary Question: Regarding the strategic review and asset sales - Management confirmed that the strategic review and the $1 billion asset sale program are proceeding concurrently, with no major asset sales expected before the conclusion of the strategic review [20][22] Question: Impact of higher interest rates on rate case requests - Management indicated that discussions with regulators remain constructive, and the number of rate cases is consistent with business plans despite the higher interest rate environment [24] Question: State of the M&A market and private transactions - Management noted robust interest in renewable energy assets from various financial and strategic players, indicating a healthy private market despite public market fluctuations [28] Question: Timing of the strategic review - Management expressed confidence in completing the strategic review within the three-month timeframe, citing their experience with asset recycling as a factor [65] Question: Opportunities in the regulated business - Management highlighted growth opportunities in safety, reliability improvements, and renewable energy integration within the regulated business [86]

Revenue and Earnings - Revenue for the three months ended March 31, 2023, was $778.6 million, a 6.2% increase from $733.2 million in the same period of 2022[2] - Net earnings attributable to common shareholders rose significantly to $268.0 million in Q1 2023, up from $88.7 million in Q1 2022, marking a 201.5% increase[3] - Basic and diluted net earnings per share increased to $0.39 in Q1 2023, compared to $0.13 in Q1 2022[3] - Net earnings for the three months ended March 31, 2023, were $249,610, compared to $52,598 for the same period in 2022, representing a significant increase[14] - Net earnings attributable to shareholders of Algonquin Power & Utilities Corp. for the three months ended March 31, 2023, were $270,139,000, compared to $90,965,000 for the same period in 2022, representing an increase of 196%[74] - Basic and diluted net earnings per share for the three months ended March 31, 2023, were $268,047,000, up from $88,745,000 in the prior year, reflecting a significant growth in profitability[74] Operating Income and Expenses - Operating income increased to $142.5 million in Q1 2023, compared to $137.2 million in Q1 2022, reflecting a growth of 3.4%[2] - Operating income for the three months ended March 31, 2023, was $142,474,000, compared to $137,246,000 in the same period of 2022, showing a slight increase[79] - Cash provided by operating activities for Q1 2023 was $34,218, a decrease from $166,221 in Q1 2022[14] - The company’s cash paid for interest expense in Q1 2023 was $102,712, compared to $61,606 in Q1 2022[16] - Interest expense for the three months ended March 31, 2023, was $81,918,000, compared to $57,943,000 in the same period of 2022, representing an increase of approximately 41%[79] Assets and Liabilities - Total assets as of March 31, 2023, were $17.9 billion, a slight increase from $17.8 billion as of December 31, 2022[6] - Long-term debt increased to $7.3 billion as of March 31, 2023, compared to $7.1 billion at the end of 2022[8] - Total assets as of March 31, 2023, were $7,274,807, reflecting growth from previous periods[12] - Regulatory assets decreased to $160.2 million as of March 31, 2023, down from $190.4 million at the end of 2022[6] - Long-term investments carried at fair value increased to $1,523,520 as of March 31, 2023, from $1,344,207 as of December 31, 2022[30] - Long-term debt totaled $7,333,362 as of March 31, 2023, up from $7,088,743 at December 31, 2022, reflecting an increase of approximately 3.5%[40] - The total financial liabilities amount to $8.02 billion, with a fair value of $7.47 billion[89] Investments and Capital Expenditures - The company reported a gain from long-term investments of $220.0 million in Q1 2023, a significant recovery from a loss of $10.7 million in Q1 2022[2] - The company’s investments in property, plant, and equipment totaled $169,749 in Q1 2023, down from $327,699 in Q1 2022[14] - The Company made capital contributions of $10,309 to Texas Coastal Wind Facilities and $5,805 to projects under construction during the three months ended March 31, 2023[33] Shareholder Information - Cash dividends on common shares amounted to $95,893 in Q1 2023, slightly up from $93,381 in Q1 2022[16] - Dividends declared for common shares were $75,386 for the three months ended March 31, 2023, with a dividend per share of $0.1085, down from $115,574 and $0.1706 in 2022[64] - The number of common shares outstanding increased to 688,592,052 as of March 31, 2023, from 674,110,190 a year earlier, representing a growth of about 2.1%[51] Regulatory and Legal Matters - The California Public Utilities Commission authorized an annual revenue increase of $1,412 for Apple Valley Water System, effective March 2023, retroactive to July 1, 2022[25] - The California Public Utilities Commission authorized an annual revenue increase of $1,105 for Park Water System, effective March 2023, retroactive to July 1, 2022[25] - Liberty CalPeco is currently facing 17 active lawsuits related to the Mountain View Fire, with claims including negligence and wrongful death[83] Miscellaneous - The company plans to continue expanding its renewable energy portfolio and exploring strategic acquisitions to enhance growth opportunities[2] - The company terminated the Kentucky Acquisition Agreement on April 17, 2023, and is assessing potential costs incurred[21] - The company’s operating results are subject to seasonal fluctuations, impacting quarterly performance[18]

Algonquin Power & Utilities Corp. (NYSE:AQN) Q4 2022 Results Conference Call March 17, 2023 8:30 AM ET Company Participants Brian Chin - Vice President of Investor Relations Arun Banskota - President & Chief Executive Officer Darren Myers - Chief Financial Officer Jeff Norman - Chief Development Officer Johnny Johnston - Chief Operating Officer Conference Call Participants Sean Steuart - TD Securities Dariusz Lozny - Bank of America David Quezada - Raymond James Nelson Ng - RBC Capital Markets Robert Hope - ...