Algonquin Power & Utilities (US:AQN)2023-05-11 15:16Financial 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]