Algonquin Power & Utilities (US:AQN)2023-11-10 15:48Financial Data and Key Metrics Changes - Adjusted net earnings for Q3 2023 increased by 7.9% year-over-year, while adjusted net earnings per share remained flat at $0.11 [11][13] - Regulated Services Group's operating profit was $246.4 million, up 7.5% from the previous year, driven by rate increases [11][12] - Renewable Energy Group's operating profit decreased by 7.3% to $66.2 million, primarily due to unfavorable weather conditions [11][12] - Interest expense rose to $94.2 million, an increase of $19.2 million year-over-year, largely due to higher interest rates on variable rate borrowings [12] Business Line Data and Key Metrics Changes - Regulated Services Group experienced growth from rate increases at various utilities, contributing to a total operating profit increase [11][12] - Renewable Energy Group's performance was negatively impacted by weather, which reduced production from wind and solar assets [11][12] Market Data and Key Metrics Changes - The company reported a pending rate review totaling $90 million across four utilities, reflecting ongoing investment in utility systems [8] - The company secured two DOE grants to modernize infrastructure, covering 50% of the costs, which is expected to accelerate investment [7] Company Strategy and Development Direction - The company is pursuing a strategic shift to become a pure-play regulated utility, believing this will create focus and long-term value [5][6] - The formal sale process for the renewable energy business has commenced, with significant inbound interest from prospective buyers [6][18] - The company aims to maintain its BBB investment grade credit rating while supporting dividends during the transition [6][14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged a mixed quarter due to weather impacts and higher interest costs but remains optimistic about underlying business growth [10][14] - The company expects to meet or fall below the low end of its previously disclosed adjusted net earnings per share range for 2023 due to unfavorable weather [14][33] Other Important Information - The company is actively searching for a new CEO, with a timeline of 6 to 12 months for the process [22] - The company is focused on capital discipline and is evaluating growth versus maintenance capital expenditures during the renewable sale process [30][31] Q&A Session Summary Question: Insights on the renewable business sale process - Management believes the renewable platform is valuable and has received significant interest, expecting to complete the sale in 2024 [18] Question: Timeline for reclassifying operations as assets held for sale - Reclassification will depend on the sale process and could occur once attractive bids are received [20] Question: Update on the CEO search process - The search is ongoing with a positive outlook, expected to conclude within 6 to 12 months [22] Question: Expectations for renewables CapEx next year - No specific guidance was provided, but flexibility in financing is being considered [26] Question: Availability of tax equity financing for projects - Strong interest in projects continues, with new structures opening up additional market participants [53] Question: Impact of higher interest costs on floating rate exposure - The company is currently at 86% fixed to variable rate, above the internal target of 85% [50]