• Q4 Consolidated Adjusted EBITDA: $248.6 million, down 5.2% year-over-year.
• Regulated Adjusted EBITDA: $234.4 million in Q4, up 2.4% from 2023.
• Full Year Consolidated Adjusted EBITDA: Approximately $1.04 billion, up 2.6% from 2023.
• Full Year Regulated Adjusted EBITDA: $940.2 million, up 4.2% from 2023.
• Q4 Adjusted Net Earnings: $45.2 million, down from $81.3 million in 2023.
• Full Year Adjusted Net Earnings: $232.1 million, down from $279.4 million in 2023.
• Q4 Adjusted Net Earnings Per Share: $0.06 versus $0.12 in the prior year.
• Full Year Adjusted Net Earnings Per Share: $0.30 versus $0.39 in 2023.
• Net Proceeds from Atlantica Sale: Approximately $1.1 billion.
• Expected Proceeds from Renewables Business Sale: Approximately $2.1 billion.
• Yearend GAAP Debt: $8.05 billion, expected to be reduced by an estimated $1.95 billion.
• Yearend 2024 Rate Base: Approximately $7.8 billion, up from $7.2 billion a year earlier.
• Authorized ROE: 9.2%, with actual earned ROE several hundred basis points below.

• Warning! GuruFocus has detected 12 Warning Signs with AQN.

Release Date: March 07, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Algonquin Power & Utilities Corp (NYSE:AQN) successfully completed the sale of its Renewables business and its stake in Atlantica, marking significant milestones in its transition to a pure-play regulated utility company.
• The company reported a 4.2% increase in Regulated adjusted EBITDA for the full year, driven by new rates and higher weather normalization.
• Algonquin Power & Utilities Corp (NYSE:AQN) has a strong portfolio of assets in attractive jurisdictions and commodities, providing a solid foundation for future growth.
• The company is focused on improving operational efficiency and customer service, which are expected to enhance its performance and stakeholder value.
• The Southwest Power Pool approved projects totaling over $700 million in capital spending in Algonquin's Empire Electric footprint, representing a significant investment opportunity over the next five to seven years.

Negative Points

• Algonquin Power & Utilities Corp (NYSE:AQN) reported a decline in fourth-quarter adjusted net earnings, primarily due to lower consolidated adjusted EBITDA and higher depreciation and interest expenses.
• The company's actual earned return on equity (ROE) is several hundred basis points below its authorized target of 9.2%, indicating a need for improvement.
• The Missouri Commission announced an investigation into customer service and billing issues, which could impact the company's operations and reputation.
• The initial filing of the Empire Electric Missouri rate case was delayed, pushing the expected resolution to the first half of 2026.
• Algonquin Power & Utilities Corp (NYSE:AQN) faces challenges related to the implementation of its IT platform, which has led to customer service issues and regulatory scrutiny.

Q & A Highlights

Q: Can you provide more context on the focus areas for improvement in the utility platform optimization? A: Chris Huskilson, CEO, explained that the focus is on reducing overhead in service companies and changing the accountability structure within the organization. This involves elevating utility leaders and presidents to be accountable for all aspects of their businesses, aiming for operational efficiency and improved customer experience.

Q: What is the timeframe for Algonquin's long-term EPS growth potential to outpace the peer group? A: Brian Chin, VP of Investor Relations, stated that while no specific timeframe is provided, the company aims to achieve a targeted dividend payout ratio of 60% to 70% in a few years. The focus is on improving earnings as a pure-play regulated utility, with Rod West's leadership expected to accelerate progress.

Q: Can you provide an update on the Hydro sales process? A: Chris Huskilson, CEO, mentioned that the company plans to go to market within the first half of the year for indicative offers. However, they will only proceed with a sale if it is accretive, as they are not looking to do any more dilutive transactions.

Q: Are there any expected material transition expenses related to the sale of Renewables? A: Brian Chin, VP of Investor Relations, noted that there were some associated costs related to dissynergies in 2024, which will take time to work down in 2025. These are not ongoing costs and are part of the transition process.

Q: What are the key areas of focus for Rod West in his first 90 days as CEO? A: Rod West, Incoming CEO, emphasized aligning the team on what success looks like and focusing on areas where productive capital can be quickly deployed. His goal is to create sustainable value for customers, employees, communities, and investors, and he plans to provide a detailed outlook in 90 days.

Q: How does the realized ROE compare to historical differences between realized and allowed ROEs? A: Brian Chin, VP of Investor Relations, explained that the current earned ROE is in the mid-5% range, which is below the authorized ROE of 9.2%. The company is focused on improving this gap through internal cost management and operational efficiencies.

Q: What is the approach to bridge the gap between realized and allowed ROEs? A: Rod West, Incoming CEO, highlighted the importance of managing cost structures internally, as regulatory processes can be lengthy. The focus is on capital and O&M discipline to improve financial performance without relying on external factors.

Q: Does the billing investigation in Missouri affect the rate case timeline? A: Sarah MacDonald, Chief Transformation Officer, stated that the billing investigation is separate from the rate case and should not delay it further. The company is cooperating fully with the investigation and is focused on restoring trust and improving customer service.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.