IDACORP(IDA) - 2024 Q3 - Earnings Call Transcript

Financial Data and Key Metrics Changes - IDACORP's Q3 2024 diluted earnings per share were $2.12, an increase from$ 2.07 in Q3 2023 [5] - For the first nine months of 2024, earnings per diluted share were $4.82, compared to$ 4.53 for the same period last year [6] - The company updated its full-year 2024 earnings guidance to a range of $5.35 to$ 5.45 per diluted share [7] Business Line Data and Key Metrics Changes - Net income increased by $8.3 million in Q3 2024, attributed to higher net income at Idaho Power from increased base rates and customer growth of 2.6% [19] - Total other O&M expenses rose by$ 20.3 million, influenced by increased pension-related expenses and wildfire mitigation costs [20] - Cash flow from operations improved significantly, with a nearly $300 million increase compared to last year [22] Market Data and Key Metrics Changes - The customer base grew by 2.6% year-over-year, with residential customers increasing by 2.9% [11] - Year-to-date growth in industrial customer segments included 15% for manufacturing and 12% for food processing [11] - The preliminary five-year forecast for retail sales growth is now 7.7% annually, up from 5.5% in the previous forecast [11][12] Company Strategy and Development Direction - IDACORP is focusing on substantial infrastructure investments to meet growing customer demand, including a 300 megawatt wind generation facility [14] - The company is actively working on regulatory cases in Idaho and Oregon, with a general rate case settlement in Oregon resulting in a 12% revenue increase [15] - The company plans to file rate cases more frequently to reduce regulatory lag and align cash flow with capital expenditures [40][41] Management's Comments on Operating Environment and Future Outlook - Management noted strong energy sales driven by hot weather and customer growth, with a record system peak of 3,793 megawatts [9][10] - The outlook for hydropower conditions remains positive heading into winter, with expectations for a good snowpack [16] - Management expressed confidence in converting capital expenditures into rate base, anticipating a significant increase in earnings potential over time [42][43] Other Important Information - The company plans to maintain a capital ratio of around 50% equity and debt, estimating external financing needs of about$ 1.3 billion in equity and $2 billion in debt from 2025 to 2028 [35][36] - IDACORP's estimated rate-based CAGR is projected at 16.9%, indicating robust growth potential [29] Q&A Session Summary Question: Expectations on earnings trajectory and tax credit usage - Management expects regulatory lag to impact earnings consistency but anticipates that customer growth will eventually support earnings levels [50][52] Question: Future generation needs and resource split - Management highlighted the importance of both generation and transmission assets to meet demand, with a focus on dispatchable resources for winter [54] Question: Rate pressure and affordability for customers - Management indicated that residential rates would likely track inflation, while industrial rates would be higher due to special contracts [59] Question: Dividend growth outlook - Management plans to slow dividend growth to reinvest in the business, with expectations for more steady increases in the future [78][79] Question: Clarification on ADITC recognition - Management explained that ADITC recognition may vary throughout the year based on operational performance and regulatory processes [81][82] Question: Irrigation sales performance - Management noted that irrigation sales were affected by crop cycles and weather conditions, leading to a smaller increase than expected [84] Question: Timeline for large load potential customers - Management indicated that responses from potential large load customers are expected in the coming months [85]