AVA - Earnings call transcript Q2 2019

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Welcome to the Avista Corporation Second Quarter 2019 Earnings Conference Call. My name is Hilda and I will be your operator for today. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note, that this conference is being recorded.

the to turn now will call Mr. over I Wilcox. John Mr. Wilcox you begin. may

John Wilcox

welcome Good second morning, Hilda. to everyone, call. Thanks, conference and Avista's earnings quarter XXXX

on released and were this our available earnings website. Our pre-market are morning,

are Avista Morris; Vice Customer and Officer, and Scott President, CFO, Joining me Thies; Corp. Krasselt. and this Corp. of Controller, President, and Avista Vice the Senior Vermillion; and Chief Vice Kevin President Chairman Ryan Dennis Mark Christie; CEO, Board President Affairs morning External

that and some made change. everyone the are I statements statements be would remind like to will of today and that to subject involve uncertainties, forward-looking are assumptions, risks which

XXXX For reference second quarter XX-Q XXXX, to in results those for which to actual of discussed our on are various for the today's call, could to website. and cause materially refer from which the differ please available factors XX-K our

would presentation, today's recap To press I financial in release. begin like results presented to this the

the $X.XX consolidated second second to compared quarter for were XXXX. diluted share, XXXX of for Our earnings $X.XX the of quarter per

per consolidated compared year. last For the $X.XX to were XXXX, for diluted earnings share year-to-date $X.XX

discussion turn Now the I'll Scott. to over

Scott Morris

Well, thank good morning, everyone. and you, John,

on Board, together dedicated for employees Avista for company achieve look this forward and of accomplished it continuing will As taking March X, alongside exceptional nearly incredibly Vermillion retiring we to over service those we've I'm I effective to great previously XX and the I've Dennis as company have as be XXXX, years. continues what serve. been XXXX. and my serve on announced, will October proud CEO honored outcomes this X, be lead and to

company his the next Dennis and leadership to him every CEO experience expertise clearly in years planning aspects his abilities and into company of deep successfully and demonstrated and company. lead Dennis the the as evolution commitment extensive has of diligent in of been positions I company our succession next We've over deliberate his the this all Avista to the in the well the to confidence have future. and shape

mark local proud Earlier million rich philanthropic communities. event this were of our year, example long made championing Avista tradition we to latest serve. To commitment $X that the of to Avista's a communities the fund strengthen Avista's initiatives This major XXXth this is contribution historic birthday. we celebrate of

we've It's decades, by community initiatives. million worked members resilient. We'll make stronger the our more we side places earmarked to live on For focus where into with side to three over three our and years. $X next infuse committees the better,

issue help We both, homelessness. complex find First, wants Avista small, this communities solutions. to know face and large and

by youth their We Second, to building We strengthen exciting our for future. and really challenges small-town investing on in and neighbors. for and pride. know set to things success. And accomplish youth communities want partner we excited resilience we're our initiatives youth an today's possibilities. path can third, the face many that solving will continuing We that's each why great other recognize I'm about tough we that problems, care when that with

operating about the lower we we other AEL&P businesses, quarterly our from solidly gain by from These was also and the our above second our were a expectations some offset our At in earnings full expected million year other to customer had guidance. increases had of which and subsidiary $X.X quarter, earnings, commitment meet partially quarter a our our METALfx donation sale second earnings and of we in our I investments. costs completed to as resulted regards strong benefited about. spoke that better-than-expected just With growth. the

rate rate we our the Idaho, case to agreement process August. case in to gas Regarding June, regulatory electric we and file general July, were remaining and settlement natural matters, Oregon in regulatory this issues the reach general for in in work Washington. we In of in to expect later all-party in through we an able continue filed principle an

XXXX rate these in expect experiencing. provide relief reducing have lag to cases early begin and the regulatory we've We that been

year of the fee due share termination XXXX transaction earnings investments to of This diluted earnings share from we XXXX, $X.XX includes the to-date, by was per METALfx full range by per diluted businesses. earnings $X.XX receipt at are our to quarter, the of on first other guidance One Based our the raising $X.XX the share. offset payment remaining in gain per from guidance We're Hydro which the a raising costs. of $X.XX partially results for of the consolidated sale for and to diluted

I'm going Mark. it to over And to now, turn

Mark Thies

Thank to Czech so Republic you, to on Flyers, the Blackhawks everybody on against Scott. the in calendars Xth October calendars it's Good morning, early. want Philadelphia day mark get good open a everyone. their the your I as just

well impact the has commitment Hydro that Utilities increases For the last and Scott year-to-date -- $X.XX basis, growth. from of offset then increased year. distribution transaction contributed by Hydro share, were One rate to mentioned per $X.XX One donation $X.XX XXXX, to on compared earlier. year due increases positive year-to-date from these an second payment diluted as as quarter O&M share in And associated costs $X.XX in Utilities we've contributed of Avista primarily contributed termination to last and The increase the transmission increase the payment per diluted customer general that and a the was Avista with and and

$X.X $X.X of compared million to XXXX. million $X the in The to ERM compared a quarter benefit a $X benefit a was second million of pretax of of XXXX. recognized in we've million Year-to-date, the benefit second benefit quarter in in Washington a

expenditure utility for additional results Utilities million $XXX to and for to our the an wind expenditures of have increased continue and on committed be project we necessary to the customer capital infrastructure expect growth. primarily capital capital $XX renewable million additional a investing Avista integration and from We increase

$XX mentioned expect in order to As issue represent our approximately million million debt, refinance, increase we an million long-term to and and an have and under $XXX higher our of debt maturing June long-term This equity capital. XX, of facilities capital existing available our capital as expenditures expenditures $XXX capital the fund of liquidity $XX we with does to structure. then million and up I of maintain appropriate credit additional

the in payment As don't now increase One and results included we're range include Hydro costs -- to $X.XX known because they're raising guidance gain in the a guidance to on Typically, raising second in our for share quarter. is guidance both on and and we Scott our $X.XX of consolidated mentioned earlier, known. paid until a the primarily that diluted METALfx fees of transaction increase $X.XX is we're termination ends. which And the that to includes occurred and the per those

following align midpoint more termination return earnings of the X% from and original X% by through X% I'll to growth our we Going One. forward, XXXX starting continue growth the to payment guidance normal reduce point to strive those based authorized excluding XXXX with XXXX the our XXXX. anticipate which as on from growth regulatory And earnings with -- timing the To the $X.XX returns earned to XX% Hydro a also XXXX. is calculated earnings but achieve of this to lag closely annual we

file. and -- timely expect from in if the cases really expected we way our to jurisdictions of recovery those all we been only get rate to These that growth we -- the filing rates achieve is we've

to approximately $X.XX $X.XX $X.XX ERM. in Avista diluted our including again the range be Utilities transaction to midpoint the expect not contribute that of share. guidance cost. We to per $X.XX benefit currently share expect does add which of expense is We the to any diluted in sharing band or The the expected XX/XX per include under

outlook about in below-normal generation year expectation Avista include in XX% normal our of hydro the among Our expectations. our for temperatures for this precipitation We're assumes hydroelectric remainder we other the of year. for so Utilities do variables that and

$X.XX AEL&P outlook the and For the normal contribute there among XXXX, precipitation of generation again expect remainder hydroelectric of we $X.XX for diluted to in the share variables year. to our other per assumes and range

share, in from we our well an our other $X.XX the from change expect to guidance to in our earnings $X.XX gain diluted from sale increase other investment the gains is due range previous to again METALfx as other guidance $X.XX of on businesses. businesses and The per as contribute

operating guidance not or conditions or until are and effects acquisitions the known only normal does settlements include and and generally unusual items dispositions includes Our certain.

I will to John. call over not return the back

John Wilcox

call open we this will questions. for And now,

Operator

Thank you.

will We Bank We from question-and-answer session. the [Operator America of have Instructions] now Richard from begin a Ciciarelli Lynch. Merrill question

Richard Ciciarelli

Hey you can me? morning, hear

Mark Thies

Yes, you. can morning. Good we hear

Richard Ciciarelli

right great. All

recently Washington I touch legislation, recently commission implementation. the its a know Just wanted workshop held on enacted on to the

taking Just around and cap. just if thus X% any points or maybe cost specifically curious the far feedback

Kevin Christie

details and in at Christie. Kevin was we Hi. the really the specifically any get of level, -- the the workshop didn't Thanks This a question. for The is that X%. workshop procedural

Richard Ciciarelli

Okay.

though? feedback thus initial general in no far So

Kevin Christie

process implement. No. forward and the We're to the really just move steps talking about to

Richard Ciciarelli

largely guidance kind loss. just else Got Okay. sale. is going it you from loss forward. to it. continue? here $X.XX curious that And have your a on expecting been historically, $X.XX Are raised you business still your anything other you're business a separately, how to on you about of I'm that the there And that you thinking or raised METALfx like

Mark Thies

due is the yeah. to big The so change gain,

You future the that. won't of -- in gain the you wouldn't expect

we So that'd back. would and be out be stripped

been especially there. with expect go with course making been Energy invest to of we've time Now Partners through the of continue has to we the investments, early successful in businesses their and some money we do as making, begin Impact -- those investments we

you -- correct. are So but

we and area out to continue. we do have in expect that losses historical forward that strip that going You some

Richard Ciciarelli

have. I all That’s a Great. right. lot. All Thanks

Mark Thies

Thank you.

Operator

Patterson from next Paul Glenrock question Associates. from The comes

Paul Patterson

guys. morning, Good

Mark Thies

Paul. morning, Good

Paul Patterson

to guess. So, on just follow-up that I

we basically think about I thinking gain, in so loss saying? of there these portfolio some of this of business? going you be And track expecting should general the this is -- sort terms terms onetime how a just is see In sort back management -- Just is we or not should this to that guess? business you're you're investment, that of -- really a in what about

Mark Thies

and investments. business in a is very we small these This times, of piece invest Yeah. our very, at

them in it's community small and this gain losses, development, some them on small very many we -- of of -- have Some and local a communities are we losses our of have did they're one.

so over a just a time of It's a so gain, small revert a guidance. it our share It's profitable. generally METALfx legacy with lot but we We've spend and small do less turn loss, long than to owned in time on very for will exited a to And business, part expect don't a those. is very company. of time we those our a $X.XX that

a We continue expect if there that loss. was to

do that we we investments move as generate expect we're gains through these making today. forward But to

on But but some We know of expect get other now two. we to next a or expect give back we do probably near-term we are with given but don't that lag. we because turnaround, we've year rates to the loss. to So, the small to the that it'll beyond guidance growth businesses, ultimately in revert earnings, will where

Paul Patterson

just, then effective the in beyond? into associated but apologize, of what settlement. and could that what's dovetails the the just of then, the -- see And a just is it's rate and about sort discussion just of the what seems with the more exactly -- And the tax I any. being words release, and normalized XXXX, there it settlement was little for tax just with thinking it how is in And in a you on tax negative earnings rate it I Okay. impact in the -- rate? sort to XXXX the general rate And bit you sort elaborate X.X% related you’re going tax other just the if of

Mark Thies

about Well, is year for I tax expect think see we the XX%. rate to the normalized

second some offsetting have quarter, did and the they we things depreciation were some So, occur unusual changes. in

XX%. overall rate is So, -- the we statutory at

We have certain some have. small state we other states taxes in

We time. in to an to over effective expect as XX% tax XX% the it range rate probably be

Paul Patterson

-- Okay. a could you a elaborate the what more I the not apologize was was there? and But being elaborate bit you happened And on it. it it the earnings -- impact with for have top associated little any bit sounds on negative strip what's just X.X% coal words, going did In other deal, little it that could of of there? more just outside like

Mark Thies

Yeah. so yes. We offsetting Well, additional at were depreciation coal strip.

impact. earnings really it no had So

Paul Patterson

just forward? And we general, to XX% be going roughly should a on basis Okay. XX% thinking normalized in speaking

Mark Thies

Yes.

Paul Patterson

guys. Okay. Thanks much, so

Mark Thies

Thank you, Paul.

Operator

comes from question Karp KeyBanc. from The next Sophie

Sophie Karp

Hi. guys. me? you hear Good morning, Can

Mark Thies

--I don't to move we need you if can barely if you because you. Sophie closer can know hear

Sophie Karp

better? Oh, is this

Mark Thies

better. It's

Sophie Karp

for Thanks you. Thank question. great. Oh, taking my

a of you this real been this a for have just you gain items numbers base future gain sale the little earnings quick, we growth year would and a been just thinking bit about then what those we So had without right? fee versus crystallize booked a as your that from without should those the So business. on a the bit that of what obviously, as this would have in have been it would items year be base and be and the maybe us, noise you there's Could should merger for the thinking you better little what the guidance?

Mark Thies

Okay.

the take other so with costs you share largely net again and associated Just to $X.XX guidance. that due is termination we termination take -- the also the of $X.XX out gain earnings. you you any would guidance fee fee utility METALfx out would consolidated out of a the raised guidance -- and the And on then take the

again on $X.XX kind towards growth earning as by have then back would the return that So if do ease get expect of higher just took back a we -- to other would out as calculation trend allowed And I to for say our XXXX. we get we to baseline. the you of getting you

off in $X.XX we the X% that So guidance. XXXX, that our midpoint takes termination And the original of off to fee. would of XX% to expect growth have

Sophie Karp

And from so $X.XX and the METALfx? $X.XX

Mark Thies

depends. it Well

have you're do guidance, $X.XX. the to you taking If don't original

well. you today's you If as do guidance take $X.XX the

Sophie Karp

Thank you. Got you.

Operator

The Vedula Capital. next Murti from question comes Avon from

Vedula Murti

Good morning.

Mark Thies

Hi, Vedula.

Vedula Murti

make I question. I to Paul the to Patterson's sure want just answer understood

prior then normalizes goes the the associated income say is depreciation effect? we rate that you're With X.X% with and that the tax net forward expense higher go expense -- much depreciation saying such associated there that's what tax negative is why away into XXXX if future no rate the is

Mark Thies

is no effect quarter. There this income net in

the have the future on I But roll strip. depreciation in in mean, will some that impacted. future you're continuing Our again a be taxes will higher you'll to with offset as coal same forward this catch-up. had the as it be offset in are happened impact to a little one-time quarter basis it we we doing have because the won't change so annual on do also a and there, depreciation

additional You think any don't future. It's any to offsetting accelerated that additional about in depreciation for it be the even -- XXXX. going for coal

this has stands point the guidance that our we've provide it's -- taxes the what and at So we'll for quarter as -- the future impact said. this

going not does details every don't You into it event. get affect going -- forward. have item to guidance I'm -- to line not It's of our

Vedula Murti

that periodically item, consider onetime as made a million the terms should something the contribution or -- or in something that I any of occurs? did So about your this the over that I material if a you is in be as activities years And Okay. was me as onetime $X every it -- just we be little bit that type community like few of just that a of as part shouldn't release, item of help perpetuating should because kind that me reading not fashion? think strike

Scott Morris

to we do a reflection communities XXXth The we wanted the and impactful for No. that was $X million and something of serve. anniversary our unique

contribution. a that was -- onetime we'll So

do the we XX we but we've around last done year for philanthropically, do that though that have a really addition, In years. $X million

onetime $X million contribution. is So unique that a

Vedula Murti

be So to remove basis appropriate at to it that least $X ongoing an would million? offer

Scott Morris

Yes.

Vedula Murti

you very Okay. much. Thank

Scott Morris

Vedula. Thank you,

Operator

Chris The next question comes from Ellinghaus Capital. Williams from

Chris Ellinghaus

Hey, guys. Good morning.

Scott Morris

Chris. morning, Good

Chris Ellinghaus

any Can that? color can, other non-regulated you give income on discussed you you And of in give kind on any if release? that us number us the can more press you the

Mark Thies

maybe losses point. Historically, a so to Chris it's strategy at go that investments or recently we a have that two small certain they increases very number penny there. it's And kind the small. we ways of this decrease. valuations of -- just increase Very have as but we're both see focus And we've or a had them that really more of have there there's starting our number

overstress want to We do be large. gain to we've on -- driver but So We through really I the that increases go that was don't very small some the amount. biggest the expected not had to it's expect and as it we increase got that time, currently investments. other

Chris Ellinghaus

Okay. would three-year on Scott Was had a And in $X million quarter? the be that full bit I the I'm confused little contribution. over period. thought the said a

Mark Thies

it over three in we foundation. cash We as Well, will years foundation. donated, be gets to the expense invested it took but the the the went because impact

quarter. So we took the expense in the

Chris Ellinghaus

filings based your Idaho in are on is what you thoughts Idaho sorry? or can of us -- this business gas And a what on Okay. give is the in earn sense going to the I'm year, Oregon

Mark Thies

we're gas Well, did I not Idaho. in -- we mean a not file case

didn't return earning allowed file we case we or by at we So additional are a needing because costs. recovery our default, earnings believe of or near

So on an that filed would review only Idaho. our electric-only in that. We be

Chris Ellinghaus

you getting of a Yes. notice at thought filed was I never filed is case. That's kind I what a but had intent, of

I sure... and just make wanted So to check

Mark Thies

correct. That's

Chris Ellinghaus

point? Your had thought process changed at some

Mark Thies

No.

If But is we or ability we're our capital costs. case continue to file on Our need grow as process way. budget return to we to our allowed allowed to return in earn allowed our grow file that have to rate return we rate we the thought always don't base and have feel those earning opportunity a our case. the situations a earn

did gas. this case filed Oregon for case except numbers other Idaho ran all we for in a the So and and the Idaho cases, when numbers in natural Washington, we

Chris Ellinghaus

Okay.

So notice sure you -- what when intent, were you you expecting? that of weren't a filed

Mark Thies

get didn't the to know if allocations specifically. and Idaho. had had we run to numbers We between We the and Washington

have ability X So file of to to -- notice intent, rate the efficient. be have recovery to get to ability a by but case that January so we to we have file

Chris Ellinghaus

on any its Oregon Also settlement to you. is Got Right. prior it give to filing? the possible color

Mark Thies

the parties. the And No. I agreement the going that. until to principle saying have filed that's parties other we're not we than it we all with filed -- commission, provide in an mean, reached

so that making long. month, you wait this not expect too we're We

Chris Ellinghaus

it. Appreciate details. the for Thanks Okay.

Mark Thies

Chris. Thanks,

Operator

comes [Operator from Capital. Instructions] next from ExodusPoint Levi Andrew question The

Andrew Levi

guys. Hi,

quick a have Just question.

Mark Thies

Andy. morning, Good

Andrew Levi

How are you?

Mark Thies

Good.

Andrew Levi

cost my on not Just the I'm familiar with That's you that, just only explain. question. X% cap, if just could

Kevin Christie

Hi. This is Kevin Christie.

to saw the in the X% to costs to exceed those need to again of back If customer extent that costs off the that legislation the kind spending energy utility a with clean law. of compliance has the rates. the the with provide complying incurring the notice have that can We legislation. related and in or impact Washington legislation specific to is we And on it that legislation if complying passed we is

Andrew Levi

Okay.

confused. little just I'm sorry, I'm a So

X%, is you're can you than what for your can So that X%, saying? more, more rates ask raise you up costs but go

Kevin Christie

go more we're less then spending. at X% by complying not commission up can difficult the costs with i.e. If with a X% than move or the having file time to we forward additional

Andrew Levi

Oh, like you CapEx? mean

Kevin Christie

to... Yes, related CapEx. is Or the if cost

Andrew Levi

So for not that's -- are renewable you though, right? that's but just overall

Mark Thies

Correct. Yes.

For the clean legislation.

Andrew Levi

Right.

Okay.

So it's it. clean I got just legislation. the for

Thank very you Okay. Good. much.

Mark Thies

Thanks, Andy.

Operator

Mr. this comments? Do no we questions. any further moment, Wilcox, final you have show at

John Wilcox

a I great Yes. thank today. company. our interest to everyone appreciate for day. want your certainly Have us joining We in

Operator

you. and conference. this We Thank gentlemen, Ladies today's participating. for thank concludes you

disconnect. may You now

Avista (AVA) 7 Aug 192019 Q2 Earnings call transcript