Algonquin Power & Utilities (AQN) - 2020 Q2 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Adjusted EBITDA for Q2 2020 was $176.3 million, down approximately 7% from $190 million in the previous year [20] - Adjusted net earnings per share were $0.09, compared to $0.11 reported last year, below expectations of $0.11 to $0.13 [21][22] - The Regulated Services Group reported an operating profit of $112.8 million, an increase from $109.5 million in the same quarter last year [20] - The Renewable Energy Group's operating profit decreased to $82.6 million from $93.4 million in 2019 [21] Business Line Data and Key Metrics Changes - The Regulated Services Group's operating profit increase was attributed to the addition of New Brunswick Gas and St. Lawrence Gas, new rates, and operating cost savings, partially offset by decreased customer demand due to COVID-19 [20] - The Renewable Energy Group's profit decline was primarily due to timing of distributions from an affiliate investment [21] Market Data and Key Metrics Changes - Customer demand across some utilities saw moderate decreases, impacting Q2 results by just over $0.01 per share [9] - The company experienced load reductions due to decreased demand from COVID-19, estimating a $9.6 million impact on divisional operating profit [24] Company Strategy and Development Direction - The company is focused on three pillars: operational excellence, growth, and environmental social governance (ESG) [11] - A four-year framework agreement with Chevron aims to co-develop over 500 megawatts of renewable power projects, indicating a strategic shift towards commercial and industrial (C&I) growth [15] - The company remains committed to a five-year $9.2 billion capital investment program, expected to grow the asset base to nearly $17 billion by the end of 2024 [31] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's resilience and ability to navigate COVID-19 impacts, noting uninterrupted utility services [9] - The company anticipates gradual easing of demand reductions as states reopen, with a focus on maintaining operational excellence and customer engagement [24] - Management reiterated the 2020 adjusted net earnings per share guidance of $0.65 to $0.70, citing normalization in customer demand [25][49] Other Important Information - The company successfully raised $724 million through an equity offering to finance renewable development projects and general corporate purposes [27] - Algonquin was added to the S&P/TSX 60 index, enhancing visibility to investors [28] - The company is focused on maintaining a balance between regulated utilities and renewable energy, with no major shifts anticipated in strategy [68] Q&A Session Summary Question: Context on Missouri rehearing timeline and weather normalization mechanisms - Management expressed disappointment with the commission's decision and has filed for a rehearing, with no set timeline for a response [37] Question: Background on the agreement with Chevron and potential for similar agreements - The partnership with Chevron was developed through extensive discussions, focusing on minimizing energy costs and aligning both parties' goals [39] Question: Risks to hitting earnings guidance - Management noted normalization in demand and favorable weather conditions, indicating confidence in meeting guidance despite challenges [49] Question: Update on BELCO acquisition and New York American Water status - The BELCO regulatory decision is expected by October 4, 2020, while evidentiary hearings for New York American Water are anticipated in mid-December [73][75] Question: Simplification of financial complexity - Management is reviewing opportunities to simplify operations and improve financial clarity while maintaining credit metrics [79]