Workflow
Algonquin Power & Utilities (AQN) - 2024 Q3 - Earnings Call Transcript
AQNAlgonquin Power & Utilities (AQN)2024-11-07 17:19
Filings
Slide

Financial Data and Key Metrics Changes - The company reported year-over-year growth in revenue and adjusted EBITDA of 1% and 4%, respectively, primarily due to the implementation of new rates across several regulated business facilities [28] - Adjusted net earnings and adjusted net earnings per share decreased by 5% and 20%, respectively, due to higher operating expenses, depreciation, and interest expense [29] - The Q3 balance sheet debt, including continuing and discontinued operations, is 8.7billion,whichincreasedfromQ2[31]BusinessLineDataandKeyMetricsChanges−AdjustedEBITDAgrowthfortheregulatedbusinessinQ3wasup38.7 billion, which increased from Q2 [31] Business Line Data and Key Metrics Changes - Adjusted EBITDA growth for the regulated business in Q3 was up 3% year-over-year, driven by new rates and higher HLBV income [30] - The company has 13 pending rate reviews, representing approximately 205 million in revenue requests [26] Market Data and Key Metrics Changes - The company expects to receive approximately 1.7billionto1.7 billion to 1.8 billion in net proceeds from the renewable sale after satisfying off-balance sheet construction loan obligations and other renewable liabilities [31] - The Hydro business represents an annual EBITDA run rate of approximately 25million[13]CompanyStrategyandDevelopmentDirection−Thecompanyistransitioningtoapure−playregulatedutility,havingmadestrategicdecisionstosimplifyandfocusthebusiness[9]−ThecompanyplanstomonetizeitsHydrofleetaspartoftheseparationtransaction,withthesaleprocessexpectedtobegininthefirsthalfof2025[13]−Thecompanyaimstorecoverandearnareturnoncapitalalreadyinvestedbutnotyetcapturedinauthorizedrates,withthreelargeratecasesexpectedtoimprovereturns[19]Management′sCommentsonOperatingEnvironmentandFutureOutlook−Managementexpressedconfidenceintheactionsbeingtakentopositionthebusinessforcustomervalueandgrowththroughsimplificationandfocus[13]−Thecompanyanticipatesthat2025willbethefirstyearfocusedentirelyontheregulatedbusiness,withshort−termresultsimpactedbythetimingofratecases[23]−ManagementisoptimisticaboutthepotentialforimprovedratecaseoutcomesandleveragingthenewITplatformforoperationalefficiency[23]OtherImportantInformation−ThecompanyhasfiledratecasesforEmpireElectricinMissouriandCalPecoinCalifornia,withexpectedrevenueincreasesofapproximately25 million [13] Company Strategy and Development Direction - The company is transitioning to a pure-play regulated utility, having made strategic decisions to simplify and focus the business [9] - The company plans to monetize its Hydro fleet as part of the separation transaction, with the sale process expected to begin in the first half of 2025 [13] - The company aims to recover and earn a return on capital already invested but not yet captured in authorized rates, with three large rate cases expected to improve returns [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the actions being taken to position the business for customer value and growth through simplification and focus [13] - The company anticipates that 2025 will be the first year focused entirely on the regulated business, with short-term results impacted by the timing of rate cases [23] - Management is optimistic about the potential for improved rate case outcomes and leveraging the new IT platform for operational efficiency [23] Other Important Information - The company has filed rate cases for Empire Electric in Missouri and CalPeco in California, with expected revenue increases of approximately 92 million and 39.8 million, respectively [20][25] - The company is not providing 2025 guidance at this point but plans to offer guidance when reporting fourth-quarter results [35] Q&A Session Summary Question: Can you provide more color on the remaining 300 million in rate case submissions? - Management indicated that they will continue to file rate cases but did not provide specific details on the remaining amount [40] Question: What impact could the Empire rate case have on 2025? - Management noted that while the rate case was just filed, historical resolution times suggest a small impact in 2025, with more significant benefits expected in 2026 [42] Question: Any updates on the Hydro process? - Management confirmed there have been expressions of interest but stated that the process has not yet started, focusing first on larger asset sales [50] Question: How will proceeds from Hydro assets be utilized? - Management emphasized maintaining flexibility and self-funding as priorities, with no immediate plans for share buybacks [55]