• Revenue Growth (Continuing Operations): 1% year-over-year increase.
• Adjusted EBITDA Growth (Continuing Operations): 4% year-over-year increase.
• Adjusted Net Earnings (Continuing Operations): 5% year-over-year decrease.
• Adjusted Net Earnings Per Share (Continuing Operations): 20% year-over-year decrease.
• Debt (Including Continued and Discontinued Operations): $8.7 billion as of Q3.
• Net Proceeds from Renewables Sale: Expected $1.7 billion to $1.8 billion after obligations.
• Rate Base Increase Request (Empire Electric Missouri): $534 million with a $92.1 million revenue requirement increase.
• Rate Base Increase Request (CalPeco California): $154 million with a $39.8 million revenue requirement increase.
• Year-to-Date Adjusted Net Earnings (Continuing Operations): $187 million.
• Year-to-Date Adjusted Earnings Per Share (Continuing Operations): $0.25.

• Warning! GuruFocus has detected 9 Warning Signs with AQN.

Release Date: November 07, 2024

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

Positive Points

• Algonquin Power & Utilities Corp (NYSE:AQN) is progressing towards becoming a pure-play regulated utility, simplifying its business structure.
• The company has announced the sale of its renewables business for up to $2.5 billion, which is expected to close by early 2025, providing significant capital.
• AQN has successfully implemented a new SAP-based IT platform to enhance customer service and back-office processes.
• The company has filed several rate cases, including Empire Electric in Missouri and CalPeco in California, which could increase the rate base by over $700 million.
• AQN's third-quarter financial performance showed year-over-year growth in revenue and adjusted EBITDA, driven by new rates across its regulated businesses.

Negative Points

• The transition to a pure-play regulated utility has introduced short-term regulatory lag, impacting the timing of rate cases and financial results.
• Higher operating expenses, depreciation, and interest expenses have offset revenue growth, leading to a decrease in adjusted net earnings and earnings per share.
• The issuance of 76.9 million common shares has diluted earnings per share, impacting shareholder value.
• The company faces challenges in recovering and earning a return on capital already invested but not yet captured in authorized rates.
• There is uncertainty regarding the sale of the hydro fleet, which contributes significantly to the business, and the decision will depend on creating shareholder value.

Q & A Highlights

Q: Can you provide more details on the rate case submissions, specifically the $700 million target recovery and the remaining $300 million? A: We are not providing a detailed breakdown of the remaining $300 million. We will continue to file rate cases, with Litchfield being the next focus. The target is a moving number as we continue to invest, and we expect this process to extend into 2027. - Darren Myers, CFO

Q: What impact could the Empire rate case have on 2025, and how much of it could be retroactive? A: Historically, Empire's rate cases take about 12 months to resolve. The impact on 2025 will be minimal, with the full benefit expected in 2026. - Darren Myers, CFO

Q: Can you update us on the deferrals of depreciation and the regulatory allowances? A: We have submitted applications in New Hampshire and Arizona but have not yet received responses. - Christopher Huskilson, CEO

Q: Regarding the hydro assets, is the sale process underway, and what are the expressions of interest? A: We have received significant interest but have not started the sale process. We plan to market the hydro assets in the first half of next year, but a sale will only occur if it creates economic value. - Christopher Huskilson, CEO

Q: If you sell the hydro assets, how might you use the proceeds? Could it lead to share buybacks or accelerated utility investments? A: Our priority is maintaining an investment-grade rating and self-funding. We aim to use proceeds to maintain flexibility and invest in the business, depending on regulatory lag and capital spend timing. - Darren Myers, CFO

Q: Could the purchase price for the power business change again, and how does this affect the overall economics? A: The purchase price range increased due to bringing $200 million on balance sheet, with no economic effect. The range accounts for project completion costs, and we are comfortable with it. Timing of tax attributes also affects proceeds. - Darren Myers, CFO

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