AVA - Earnings call transcript Q1 2022

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Operator

Good day, ladies and gentlemen, and thank you for standing by and welcome to the Avista Corporation Q1 2022 Earnings Conference Call. [Operator Instructions] As a reminder, this conference call is being recorded. I would like to turn the conference over to your host Ms. Stacey Wenz. Please go ahead.

Stacey Wenz

everyone. morning, Good first Avista’s earnings call. conference Welcome quarter to XXXX

quarter released on premarket Our website. earnings morning. were first our available and this XX-Q Both our are

Joining Christie; Senior Ryan Vice CEO, External President Accounting Affairs President, me Officer, Customer Avista Krasselt. President, President, and Vermillion; Officer, Controller Chief Kevin Principal Treasurer Thies; Executive Vice Vice this and Mark CFO, and are and morning Dennis Corp. and

which assumptions, are made be to Some of risks are statements and that that uncertainties, the today involve subject forward-looking change. will statements

For the results factors today’s results release. financial could to begin which our XX-Q which differ refer today’s XXXX in available in presented of and XX-K are please I’ll reference by discussed for on various recapping to quarter website. press cause the for XXXX the materially actual from call, first to those our

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

the Now discussion turn I’ll Dennis. over to

Dennis Vermillion

We solid with the and the were and pleased good are Well, Avista XXXX quarter. we first above our a earnings start had morning, results thanks, utilities as to expectations Stacey, everyone. real of

higher remainder of XXXX, performance for partially And of we economic the upon based Our certain was anticipate expenses. timing the current result the seeing environment. cost of

seeing of end chain years the that always year. as recent than supply However, constraints, seen for rates. costs higher Commodity our in some other our to as lingering of update we Not the include we’ve expect markets. we some competitive seeing environment. end these general and labor thankfully, on challenges these interest on higher XX authorized of almost a that XXXX obviously, about earnings happy unlike like changes these as these contributing than that, to pandemic, towards issues past, consolidated issues, costs rate And we tail and current do are well are of and in that, in we increased costs the cases. interest course, full operating other electric To so have proactively the are the address inflation companies pending targets all looks case, managing in some our and all of power are future do, supply and that we’re we are rate to really meet costs track we’re what we’re to which difficult

cost always, are also to results. As fundamental efforts achieving management our

help have to adjust adjustments cost in seen, of In towards with which filed goals. take we to our continued rates needs the going gas progress western forward. gas. resources PGAS, share regional March, purchase energy addition, I’m cycle account expands customer market or clean commodity to our the continuing or into meet our may customers our to market to pleased cost really In achieving Idaho and all while entered as you imbalance natural across rising energy the we renewable EIM, to out ability recently reduce Washington, of their

receive gas natural to consecutive a we in our which and industry their March, month. were introduced in that of as again are one $X by yet acknowledges a years. utilities significant ethical world’s history with the we rich recognized responsibility corporate in spans of usage more most and companies Washington And this We year renewable than the honorees also and Ethisphere of program company’s XXXX. to for energy only third in voluntary the as allows nine XXX gas recognition were customers opt little for RNG as natural we offset that one In honored

effective expect and respect general regulatory rate our March, in rate and would approved, the third cases for August. award to rates With this Oregon if win case, be to we we to of proud in really filings We’re time. settled new

the file still We a In to file Washington by of Idaho, Alaska, we XX rate awaiting cases case in the expect finally, we of expect August year. of in in and end towards quarter to regulatory this rate XXXX. expect rate recovery are first and the XXXX process then

our consolidated confirming are XXXX We guidance earnings range $X.XX of a with $X.XX. to

to expect the range $X.XX earnings range, end our lower of higher to We this per at $X.XX power confirming XXXX and we consolidated to share. primarily supply costs diluted be guidance due are of

this I presentation So that, over will to turn with Mark.

Mark Thies

quarter. things happened secondly Dennis. And you, Dennis good And Thank ended. had morning Blackhawks everyone. first Like we said in Good good quarter. the two the a pain

did not playoffs. make the the ended we So and season

TV your turning see won’t on him. you So when to watch hockey, you’re

this share, increases benefits per first a and compared the our timing year, to we said this and those trying Dennis benefits better had of due the had XX margin gets through income through partially above our taxes. to $X.XX our rate were cases that of For was some quarter as year, the keep the of those to just cases customer we’re quarter expectations tax line and utilities because XXXX Compared but that Idaho completed primarily historically lower recorded the the last credit late to and bills of first quarter. rate contributed due from effective benefit in but come the revenue to gross Washington in the

was offset income going bills that process. credit tax higher forward in a customer us to that benefit continue see and as we in will which important our have that you’ll So

have we’re I and in strong know that line but customer strong growth about us. a in also we’re for half. We percent have others our

We we’re mentioned, Dennis we customer or and as But headwinds. forward. first X% X.X% over do, we some see good as have that just we in go the expect quarter, growth and

it impacting as going supply is is the we bad, Dennis the is forecasted, which first costs be prices, Russia costs, so negative, in in which getting power is conflict we higher as the gas higher or, higher the which by are gas conflict forecasted We power impacted as part supply Ukraine, mentioned, wasn’t seen earnings why higher causes primarily have really we’ve to a to in have and us by quarter but us. prices,

We also some depreciation, O&M have costs. higher and

prior to sharing of that million benefits be and mentioned around X.X be benefit in expense in in as to I turned expect band. compared in XX% first As the mentioned, XX% customer was position the year. company do Washington I the the And we a in X,XXX,XXX quarter

we continue to in grow our As capital invest our serve we continue business to and utility that infrastructure. customers, our

XX. CapEx XX We to utilities expect Avista’s of about in each million be $XXX and

a Dennis from capital XX of other sheet were cash, our but also available expenditures in $XXX on businesses due That’s we to we liquidity our to a about down March, had in have expect expect an X spend just $XX about expect million track is repayment estimate did of it $XX we million respect But significant it We as issue April challenge AEL&P to timing With looks XX. expect goods. some in XX facility. we in previous little and a and we amount capital million. timing receiving million XX we $XXX in but they’ve the million Alaska, odd in and few And our mentioned of in their that on bit a That’s be a make of million balance the XXX numbers. they’re had some we it’s that and out me XX to to million. to because on supply be doing to we chain slightly XX, liquidity, still years, up receiving constraints, moved and late credit in of March

$XXX look about We forward liquidity. of million stock. first So And million do issued issue that in includes the common in and term of to quarter. the issue And $XX amount as stock the back expect same have that strong million we we’re expect from XX to debt to in we XX, liquidity. in today, normal we still common we and long XXX

on Moving guidance. to

we range our mentioned, are confirming So a with to guidance we’re of consolidated Dennis X.XX. $X.XX as XX confirming

range, XXXX. in almost be that in primarily due negative of lower which be ERM, end to to expect the about that the $X.X to due we expect all We again,

diluted confirming X.XX our XXXX and are X.XX guidance guidance our to of We also per share.

the we our inflation days And included in regulatory costs prior our XX increased relief it pressure the do to as mentioned, manage going continue to seek addition expect Dennis race the us inflation rate all X.X% we to which annually. our of to to effect. does of costs, assumes guidance. on guidance have relief all power in put is to has timely part X% and We some we supply of in our process. expect growth Our do as appropriate rate our into We do. And reforecast And customer impact jurisdictions. to have as

be will look supply able that market with ‘XX the costs towards more line in we get power as to we reforecast is. So the to

have pressures the will we’re to manage impact as forward expected seen in we’ve increases we ‘XX. don’t XXXX. We expect to costs us that And will have So our impact these address them achieve results. to in today to the inflationary our go seeing we same

Avista for expect $X.XX contribute in to for a ‘XX. and the to We share to ‘XX of $X.XX a range X.XX utilities share X.XX

in ranges, our was the guide mentioned, it’s and negative ranges the the our to first of as we midpoint originally moved give ERM ERM we include it as the our expect $X.XX what of as now. So don’t I impact today, $X.XX

for be work us put just midpoint consolidated. may We to from inside for at ranges to be outside going below range we’re our utility of does redo our still that we’re we slightly the range to So the, and may not the the slightly cover utility. that

Dennis case to to rate We them we per as required ‘XX. rate both year. $X.XX They this diluted or mentioned August do of to expect of share $X.XX in range file file in to a will a AEL&P and case contribute the expect ‘XX

incorporated precipitation does our into the assume ELP rest and the year. other for outlook among and variables, hydroelectric normal of Avista that’s and normal So guidance for utilities and generation our

now is spot. reasonable in hydro Our right a

it’s We right spring. XXX% cool have currently And snowpack. it’s been been about now of

us So spring water get does tend the as to that benefit off that if brings we along slowly. can cool

to until known operating effects Stacy. or $X.XX includes certain. I’ll the guidance, conditions and businesses doesn’t are We to other over expect our call not back to non-recurring anything ‘XX normal share turn does and $X.XX in and unusual, now And only our be again, include ‘XX. the per

Stacey Wenz

Mark. Thanks,

questions. We’re open for

Operator

you. from [Operator Thank America. question Dumoulin-Smith Bank of Instructions] the first comes of your Julien line from And

open. is line Your

Kody Clark

actually Mark, Thanks Hey off for taking for it’s and questions. Clark my Dennis Julien. Kody

Dennis Vermillion

are you? Hi Cody. How

Kody Clark

Doing well.

some plan? these And that. and customer on to expense the helpful maybe get I pressures know bill you about color you more actual previously ongoing increases inflation the cost costs So versus and pointed a that ‘XX How back of to ‘XX. environment X% inflationary to about and you’ve are kind your thinking normal for the also timing. and mentioned that X% it’d just cases. trending drivers upcoming over from lot the you’re how And and in some is to just of then X% be impact talked rate

Dennis Vermillion

a there. There’s lot

I’ll But about So I’ll little customer then But We do coming. talk put we but inflation, there. didn’t had our forecast. from impact. good recognize quarter. basis. a an bit that that’s a did as Kevin we an start that a cost again, impact and about we X% have And to let that’s significant the over see significant first impact, of broad in a When perspective also forecast inflationary we talked we

at We look forecast. we haven’t seen significantly higher than as that, our

We’ve our Now wages, $XXX union that come. today, and that could our And The out deal, current are in to on going rates rates. forecast. interest did change we to all then through updated our bond all incorporated. that’s rates our But Fed interest factored all we’ve that. there’s agreements of it’s that’s today current on based million our could gone where moves interest we

a employees. have wages our union new for brand We We’ve updated our agreement.

when that into and it forecast So incorporated already that that us. looks costs directly our X%, included was at is factor impact in

in But materials of impacts And To the our on work trying inflation have getting probably we’re extent impact we’ve it and ERM some the seeing on of regulatory will managing incorporated higher, costs lingers stays that future more to through That work it that. cost to than is on or either the proceedings. that. level. we longer costs does we’ll ERM capital and to And other supplies. Some does manage to

of believe If there impact. with I’ll So recovery offset can it some that our through that increases to in high to impacts we quickly. costs as challenge that we be we there. quite managing the we bill get don’t through turn But and can’t point, the customer Kevin. manage at could the inflation ‘XX this

Kevin Christie

it wouldn’t add additional really we It’s question. chance is Thanks have they tax past has to the to commission that. And effectively. used certainly Christie. in that provided can They mitigate Kody. customer case, to But with Kevin would credit Mark case. said flat it the I would the I help impact how full gets a of out. for at tax opportunity and offset the ultimately rate the commission in instance. And won’t, an the use All offset, the look to what decide it this think that use

we’re again, mitigate So pressures perspective. customer a give where we trying inflationary can. help are to But tools tough to from

Kody Clark

definitely on from and it. you move ERM Got Yes, the prior. impact gave the from And thoughts understood. $X.XX the the backdrop power the some to $X.XX

any you mentioned also healthy, But can You into EIM to included dynamic the driver from benefits in snowpack how participation figure? that views in some thus any curious being far. of on that ERM playing there have a drag. offset if of and the be $X.XX you the I’m participation Have is

Dennis Vermillion

XX/XX, it cost, is rate supply was we that amount basis, that ERM got then that in of the you’re we Kody get if over part achieve And just that the approved. say XX% but in we’ve expectations, couple we We ERM for the when million X.X X, enough. incorporated to we are and power using benefit, when get million. to we’ve exact expectations. expected the even case it already $X.XX need been we a not get in that. But been now. to amount when was system we if a on get some wide better to get additional, I just of want our again, the I but to was at benefit hypothetical, $X than got of of some we’ve significantly yes, of we had or months back to believe And an this I’m numbers don’t for say It’s but additional our our Washington into remember would an we needed the down an let’s $X And to it I from that’s as Well, it where incorporated at only in ERM. included a you the

a dollars benefits ERM. to sit the example customers they’re away a take to great that our million we bills that said that if his energy as provide of from that we market that’s benefit get in half real our when in And that the we we’re because like the continued. and an That So just we’re and customer work doesn’t where in be believe doing, the Dennis will comments and able opening in XX/XX. our company not we

Kody Clark

Got it.

it Okay. And on any your shaping then I’m just of and program I other the stages. about the year. thinking one know, you still last early have detail over if one, we is if be I can on course additional wondering just that pilot should in squeeze segment edge the how

ramps, you it would So that some anything as else to drag there helpful? can be but point

Dennis Vermillion

have look that is that from have we there been don’t our energy and there’s I technology we’ve iImpact think in clean investments shaping don’t, things a It through in what consistently the we strong. and for number performing investments been has depends, markets fairly really clean great seen I have tech at strong tech unfortunately, my I of the that partners, really a perspective. been the

like the investments quarter forecast course this not shaping, we of edge But point. that to have in But it. pressure be said, spend we the and company It’s move have and continue the that But nothing other time us year. all expect significant from We we little that’s as of individual strong. included to shape on may second over out that’s We a can’t based than lot a bit it. says we really shape you at see and quarterly the there’s to don’t pilot. a first the on fact quarter you of there

Kody Clark

Okay, jump the back time. the Thanks for I’ll in understood. queue.

Operator

question comes Thank of the Mizuho. you. your Anthony next Crowdell And from line from

open, Your line is sir.

Anthony Crowdell

ranger very could Dennis. But Mark, be your good you Good Blackhawks. tired pain and this morning, be Hey, feel Mark. a the morning. morning, on I fan

Dennis Vermillion

was was it. watching Well, I I

you three in painful I’m the was earlier hours than third Fortunately, that overtime.

Anthony Crowdell

morning. enough Coke my fortunate to I’m Diet fourth on was I this Yes. and go

struggling. I’m So

help. guys hope can So you

We renewables, there companies some core business. seeing couple transformers, whatever CapEx I they’re or a stuff looked Is just slide. reported that CapEx not the mentioning just anything but also on that in questions quick wondering Just other the on some some just at think constraints, I’m your guess. projections? that you the impact really supply could

Kevin Christie

in work getting the Well, I cost projections. timing and the think of But switch of what CapEx additional may his that we the cost those impact some pressures suppliers there amount to actually with for it don’t on have impacts necessarily and in timing constraints. is our there and is some inflationary It doing, as we’re not customers that done, And what comments our make mentioned seen may we’ve economic early Dennis obviously. and much to look one vetted had goes that international, examples very and as done was supplier. our those we’re we where they analysis we’ve others, transformers. still we like do to well, transformers did get we’ve I there. sure but new will we worked get to and will It’s said, well very but capital, That are spend we a the done of

very working hard. So we’re

working that to push is, we successful out expect at Our But able, to we’ll it. all source take the been to continue. we’ve equipment we’ve can look we that it able be as and more to chain get the point to are our We But other folks I sure of been our goods we that. carry impacting get does They able this the work forward. And necessarily. negatively time projects. not very may supply get want inventory don’t hard. to of our be make a projects capital to our timing we it’s do hard to little But as very that well done. anything away believe projects from our forecast,

Anthony Crowdell

could And up million gone really soon. due coming obviously if switch have so are a bond million $XX far rates Great. you guys this $XX I gears, to then I believe year.

for seeing talk you if on you’re could rates that Just what that? to us refi to

Kevin Christie

expect Well, We some we March. capital are we some seen we as side up the then go on through deal include quarter look the procedures. structure we processes All that our And that regulatory can capital include we we’ve do regulatory so our to a also update and $XXX quarter. into bond that’s in were known rates that million And did in million known to first forecast. mean, we that it and items. a working into as did manage for did we term item or up have to think late there. incorporate with would and measurable to $XXX short we borrow first rates refi our I incorporated measurable our

believe we take to does that but approve Now, commissions reasonable. it’s have that,

Anthony Crowdell

just Washington. it. already I’m you Got I And January filed that thoughts. me, last wondering for know filed just your in

You March. changed its settlement their seen rates I going requested have it but did a ROE. file, seems actually teams that Alaska in to moved. management haven’t you’re

because the start and is what about Oregon But tenure you maybe seen that the utilities rates? have of settlement move like the investors average. the of nine already national move think doubled in Could we’ve in you Alaska think for the forward. yet line up ROE have the you seen with year, kind beginning If the end right seen treasuries to see requested now, almost year, of filing you’ve in the the about ramping the just of since since going the as

Dennis Vermillion

significantly moved the in a over that’s it moved a it question. ROE and have is But of we’ve part somewhat. part XX great down Well of that years last down rates seen challenge,

down Idaho. from down. at went to we’re then fast we’re think when now commission’s going for jurisdictions, up least at probably percent went, know, in were to years higher, I don’t And two I We don’t the at We so Washington think and and incrementally I six, started rise six so rates I to did. came or sub don’t move in did down. X/X rates were down XX fast to XX/X but our treasuries, or So be move as while. we a ago, from We

too think So I now are If I think would commission’s love me moving add to we they I don’t move when did, But quickly up to They’re to didn’t don’t at does. see to incrementally have still think they’re they you’d I get value going don’t anything looking customers. jump to while that. And don’t move quickly to wrong. that they too up it. know don’t down. jump Kevin, what we’ll that if

Kevin Christie

that one time other in spent And our in We ROE of of where that factors increase quick and XX.XX. request environment to the XX.XX%. higher of is tool in what a that our in That’s item did than influenced the And case. detail recognition. available the just amount around we kind the Washington of did witness we’ve us fair the for asked Yes, we in part And inflation commission uncertainty. past. ask to this this have and

them. wanted available that to So we to really make

can with they authorized forward to an want So recover we us and move as return. work in

Anthony Crowdell

much questions. hopefully, so Mark, have Thursday Thanks And my a night. Great. we taking for better

Operator

of next from Thank you. And question Sidoti. line Brian Russo from the your comes

open. is line Your

Brian Russo

Hi, good morning.

Dennis Vermillion

Brian. Morning

Brian Russo

benefit you’re understand mean, expense an ERM above way in the kind kind market full for I and seasonality of hit But yet, you Hey Is that want the baseline you less in normal of a power will little at quarter hydro, prices? fourth the you’re most the the if above seasonality? have year. runoff to at first hydro million procuring to that of the the it? normal the the higher look I when and X.X conditions have going in plus of What’s just be expense the well quarter. of kind by to

Dennis Vermillion

of is just subjected then still spring far it as not assuming we mean, goes river have the power on year yes, of more perspective, from we we still And the then hydro, have become plant, The natural gas it that seasonality hydro due due run quickly we to isn’t supply the the hydro. normal lot we when have a and of as availability much. a a how to if how prices. have, much to summer melts I And volatility off. supply availability have in seasonality depends and Well, we significant as have prices. into we gas and this more the It’s

again So everybody’s due largely is, I’ll I Russia what does say impact that’s it it. that largely know to Ukraine, we’ve seen that conflict, saying that but don’t definitely XXX%

our It’s seen with loads. respect we significant availability there weather. our to that cool. than cold loads largely timing any so But significant our time, open due a because would gas gas power. prices I our really normal plants We I our a don’t become feel that to them to due And don’t leave and say it’s try loads had challenge than increases the is caused normal we impact that say we fully, load there that’s case, to to that the else the to we a the or what weather has a ERM, the fueled ERM XXX% And through increase our in we our serve haven’t but mean, cost to to largely, seasonality advantage increase If to there, hot and tend this we haven’t to and movement does anything unusually natural gas in a haven’t know, and little as And volatility it’s been lower you If catches take of of to is prices. seasonality seen. customers. prices, there

Brian Russo

understood. Right,

that during seems it first quarter like you described XXXX. the maybe, play dynamic then was just So of in

portfolio how curious purchases just I’m and actually So able to optimize market your to you’re generation benefit?

Dennis Vermillion

last the we’re way Well, little X. actually if from this in X first is shaped prices current million, year a that’s so and last I quarter, That million we our under mean, there were X.X down over we’re Brian first year, actually, on year. was bit based quarter there

did it. So in quarter the But we benefit were as year-over-year. slight recording the we have yes, first of a down well in actual

Brian Russo

it. Got

late How refinancing. on late how was compare borrowing does that April What borrowing in does And And your million Okay. of the compare the how average that deals on bond rate that your closed with rate? XXX that interest for kind does with and rate that March? that? that

Dennis Vermillion

right was it Well, around X%.

think it but that. include higher cost our of in cost X%, we I into want lower I the don’t our it overall, say borrowing, lately. I have was ticked of was it in we X.X%. than the I that had total borrowing it’s higher and average believe, just borrowing. slightly year. know is to was than expected cost but It overall, did coming Rates really up what

we the get and And we as may we or was than not it that get forward filings So a to still may that update measurable item, but expect that’s higher negative lower expected, our cost known would but up of to slightly commission the overall to customer. bit I we a go a in there. did is little regulatory we as mentioned our

Brian Russo

market to just forecasted market that are in these a mean, there then function also element that? sensitive net ‘XX to $X.XX Are other kind on how of lastly, and curious. business I’m those XXXX. of the volatility? is $X.XX Or gains just positions to the just and I Okay, monetized? EPs are on estimates

Kevin Christie

early lot necessarily look different we that. a mean at we It’s business are tech. there’s prices of growing onward our clean investments have of lot stage things rates are tied No, a not that or or businesses in different interest that I when or to and it’s these investments. not gas

or tech to there forward. a back emissions a there zero So getting is had lot what investment of it are benefit carbon clean going conditions there’s continued investments have in extent the to out

you’re own goals, are expect those as Dennis help goals. to of we country, try around those. We have mentioned. achieve to see that throughout companies clean the our to many as energy A companies say, to investments have continue lot These to trying

But it’s coming believe investment. that able for again, get $X.XX. but believe time to there. money of and forward. not any we’ve getting funding be our and customers. Does that and mean, small. have there allowed is these to it’s to there’s based be I But price as forever? we of to valuation benefit. So I is achieve return a continue next it there. years, a that It’s will focus couple impact $X.XX the monetization on our idea. we no utility And our we a into particular we move we’ll are spend there some strengthened lot very on of back in The the results. seen I That earning included primarily is there focus our know is, over

Brian Russo

very thank right, much. you All

Operator

no conference [Operator further Instructions] showing question this turn any Wenz like for you. back to the I’m And to Ms. closing Thank presenters, would at remarks. Stacey I time.

Stacey Wenz

you very today. forward you a joining a us day. We Thank seeing of look Florida. great Have few weeks in in many to much for

Operator

Thank joining Ladies and for may this gentlemen call. all concludes Thank now all conference you disconnect. you. you today’s

Avista (AVA) 4 May 222022 Q1 Earnings call transcript