AQN - Earnings call transcript Q2 2022 | Algonquin Power & Utilities Corp.

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Operator

Good morning, ladies and gentlemen, and welcome to the Q2 Algonquin Power & Utilities Corporation Earnings Call.

Following the presentation, there will be a question-and-answer session. [Operator Instructions] I would not like to turn a call over to Amelia Tsang. Please go ahead.

Amelia Tsang

Thank you. everyone. morning, Good joining XXXX for morning our for And conference us call. quarter earnings second thanks this Presenting call Financial CEO; and on President Arthur our the Kacprzak, today are our Chief Officer. Banskota, Arun and for Also joining will Jeff Officer. Johnston, our Norman, question-and-answer Johnny of Development and Chief the be Officer; the Chief our us call part morning this Operating supplemental on our available accompany earnings our presentation call To algonquinpowerandutilities.com. today, webcast we have a website,

as the on management and and are website discussion as on well and Our financial statements SEDAR also analysis EDGAR. available

Before and website will would these that continuing certain will both Arun our to Please I for most non-GAAP to our end recycling, not regarding an with like and the recent discussion including, the notice asset MD&A a conclude forward-looking and filed will Arthur include Arun information our our read information and acquisitions, expectations limited growth information, the call, of will earnings, pending the the overview results, we business. and pending At also on measures. financial regarding remind on capital SEDAR with will on to, an important provide of our strategic QX our available EDGAR, items. call, update this morning, during additional performance. you refer follow the plan forward-looking expenditures, but call on call On then our for legislation.

ask your I'll to to that We opportunity to will to it restrict with others questions I have and the And that, you if allow questions. open participate. you then additional Arun. over any then for lines two questions turn requeue, the

Arun Banskota

following $X.XX am earnings will who online. XX% financial very able metrics. adjusted or compared net good you, on join was to adjusted are with that been EBITDA QX Thank have more last delivered reported We share lived confident our we into consistently built delivering I strong our We ourselves stable report go the the to strong we've results. per QX plans see quarter strong million our track to operations, call on and year-over-year, long which was and a We business $XX. morning $XXX.X remain to increase key us second and a able as those produce and detail. our financial to in pleased to from businesses Amelia, and returns assets a year's to Arthur solid continue operations, shareholders. been as

on excellence, of focus to continue Algonquin's each And growth, provide sustainability. I these We pillars. pillars, and will on strategic operational more details three

in large our capital five of growth $XX.X year given growth is We confidence we and plan, have the number that billion have. high organic levers proportion the of

signed the by ability tax customers authorized represents bill PISA. Governor Missouri, expected to earn Accounting which or the into Bill was our the Also during tracker, Senate fair is Missouri enhance settlement the property believe quarter, a returns. second capital Plant-In-Service One the investing in of a issued the Service XXXX. the benefit X, implemented important our of Commission is rate June and quarter, business base. to our In total levers our and Public revenue regulated with Missouri rates for their and puts in XXX modifies We final law, new a utilities which on outcome its most in also report growth resulting deploying $XX.X million Company. in customers This order to increase

Another acquisitions. growth is from on our the side lever regulated

in seven year, acquisition closed New of earlier we customer connections on services Southeastern of you across Water, this counties which many over York. New know, XXX,XXX Liberty York As the

business customer connections EBITDA of this modality or of fastest approximately on measure. close the the our our Liberty New Water, is represents XX% the regulated York of and XX% growing water With sector currently approximately total

with Kentucky a we AEP Transmission per water day, waste need a gallons capacity reliable like Company. have Arizona million construction safe, waste X X.X Kentucky water next clean, started services, pending facility Company a in Given growing of reclamation for and and with population, water, the the states billion increased Power of of especially acquisition

plant. First, certain communities. have see been who X, in support recent $XX,XXX May we Public KPSC, an to individuals support the extend Services of our closing an order Mitchell order. related relating satisfaction Public can to The Kentucky that the Commission, Power the changes flooding Mitchell the the continue thoughts Power the and and to efforts, which relating is Kentucky. West to Liberty many want relief transaction ownership best FERC. the situation we impacted subject the agreements needs and of families the ownership conditions recently operating by certain precedent, operating Virginia the we Service and PSC include KPSC’s donated proposed the coal order approval On and West the Kentucky was Eastern how by of to the to of To the XXXX, to KPSC, inconsistent the those required issued to Commission monitor agreements that with local of Mitchell on On XXXX, X, July the issued to Virginia agreements

second benefits with communities discussions of remain to model for committed to local this forward look to will of identify AEP resolution a the that customers parties of transaction Kentucky XXXX. expect transaction upon operating the We close bringing in we our work to and in are Power half Eastern Kentucky. the the firmly to the which We and

our levers execute and be for front Turning active as we continue the you business, greenfield few on renewable growth with continue renewables our pipeline. updates I'd to provide a project thought to the on to we

the all quarter, with contract commercial under energy the SaskPower. with XXX-megawatt Saskatchewan a the in facility a latest Blue operations was XX-year Hill During achieve to project

renewable power are pleased Saskatchewan. generation low to a bring cost and contribute to We cleaner for communities to supply

XX with now engaged Deerfield and individuals our continues is Construction full with started. have the on to proud progress side approximately construction we long Foundations, of sold of site. XXX is years. in the remaining work We turbine deliveries wind and the collector XX% at average contract are our on life in substation assets over production our and under of have term of lived end II approximately long output QX, contracts weighted progress project

Ridge also engaged individuals in Sandy are in is II and work now and turbine Our starting improvements with expected July with construction start site. XX progress road is on first and occurring foundation ramping project to private Public bore the deliveries in August. up

executive regarding this tariff categories. On solar side believe the two the can year for into with which announced to panels, in respect two is June. U.S. that order We divided solar exemption be a

Market period two-year exemption with to before The or allows deliveries current of projects, projects construction. impacts. Of Solar, X to active projects panel and X tariff are and Carvers procurement projects Creek. restart activities the include X The completion These panel cost there are New timing New Chevron projects, current under First, the Market Chevron solar free greater resume the Solar, certainty these XX giving the months expires. the and of and

The believe through in solar the panel second XX of in industry. include with These projects would after a period. caused be to category investigation capital outlined solar the deliveries future potential our the PPA passed projects remaining be month pricing plan. We consequence could year the five

strategic in agreements, gives EPC Sandhill our I net of Wisconsin The are RNG expertise effort for RNG and gives also extremely projects. to us in gas state our of on foothold first renewable two update opportunity we in the Company's utilize non-regulated a we and we you and potential generally a a to As attractive excited supply to known to Agency a in energy universe projects which development in generation XXXX. remaining platform. contract our to at Protection renewable with try projects an are in close the gas commercial to thick expect. its we stage RNG the expected offtake the as represents equipment opportunities together as reach and investment According an operations largest to natural protect Sandhill low Earlier margins apply market. development most sector carbon contract, an of four this U.S. development of the want us with natural philosophy, as renewable this the the finalize are intensity growth the RNG projects, method Wisconsin give portfolio an highly significant late commercial the to month, Sandhill consistent Report, represents in and The Environmental is space. possible achieved operations two

communities when resiliency. and safe, to safety and while on time injuries and On performance decile basis, injuries Moving strive reliability and our critical top now the keep industry a peers. XX-month key compared operational system excellence. in We a our reliability indicators to are to our key maintaining In recordable of customers lost are of rate our focus. areas mission industry, always trailing

Award AGA and category, in Gas American the XXXX, by recognized incident for recognized Association the top being rate lowest are XXXX outstanding dedication recently performer utilities the employee and the safety. by as Canadian for to Achievement in communist winning medium for of safety safety SAFE appropriately addition In excellence demonstrated the was Association a Safety we an Recipients acronymed awards awards awarded to safety. Gas have SAFE a the

invest the continue network mission of and affordability of keeping while to in We critical to mind. to deliver living monitor our services customer challenges. communities costs our top consequent We rising costs

year approval helping million energy such Liberty for plan. through Massachusetts, as received our programs are customers one XX in efficiency the energy We where efficiency three a

that CapEx in where we OpEx focused our residential to Our committed years. customers largest next and remain to customers We commitment managing efficiency serving three are X,XXX state, income over the over affordability energy for ever opportunities. to through conversion low on

management within are cost the also utilities. on We focused

the aiming XXXX. our ratio that XX% revenues down back environmental, strategy our a Day. and cost in as values efficiency XX% of our committed brought and to we've we're we of operations. in further around last governance our Investor we XXXX by remain sustainability fact, as and our bring around XX% And in to finally, In corporate proportion XXXX, inclusion operating And at through operations down indicated maintenance firmly from to to that's social,

sustainable progress our meaningful business businesses. make each driving to continue We across of practices in

a dollar of intensity low a of XXXX of to-date in improvement revenue. the XX% equivalent X.XXXX efforts are revenue reflected Our This from dioxide our are per carbon year. gas basis is greenhouse emissions previous on

In fact, XXXX, meaningful back of reductions have five made X X last when and since the Scope look we we emissions. years our over

overall to our we businesses Fleet the a a emissions. initiatives, reduced the direct has Company growth emissions decreased focus Our result revenue our our by and emission throughout based and XX% Greening in overall of is by significant dedicated reduce This XX%. have renewable intensity

continue We also reporting. to ESG data improve our

During data ESG our on found published and website. hub including metrics, our performance our index, X X, ESG the can Scope we our and which be XXXX our X contains quarter, key which updated ESG emissions,

engagement is a employee Lastly, journey most participation team strong The allows Liberty with of is new survey feedback We survey and Company results that the a a the Survey committed of highlight the employee improvement. launched Employee recognize part is our rate continuous XX%. important corporate to and And that over our employee at pass directly speak we for principles. guiding being growth, on connected good XXXX to inclusive that second safety that, and Arthur development, citizen. to financial attributes are and With to belonging a equity results. quarter who'll Arthur. diversity, are that it our focused I'll Engagement

Arthur Kacprzak

Thank of In and reflective our everyone. second the strength resiliency core morning and we you, businesses. solid of the quarter, delivered Arun, good results,

recorded Antonio year. investment San a XXX.X January. $XXX.X current regulated in across at prior reflects million prior a New the implementation our we million of from quarter of systems, the year. rates was which York up XX%. the of well Our delivered adjusted Water, in million reflects of the of million was normalization or to as catch approximately which some year. $XX.X quarter, increase our which profit quarter also This The received our partially approximately for which operating This year, to second XX% distributions compared of increase one-time million, offset from as last the last services consolidated $XXX.X the reported up The compares operating group in water an the profit added was increase new in $X.X same utility Liberty operations is period the EBITDA as same addition million $XXX.X by in system acquired XXXX

investment compared line was long-term as last experienced energy million. our from as of profit increase solar higher averages XX% to last wind XX XX% this newly XX%. reported quarter year. offset summer which the profit from underperformance by from of XX.X to partially a for fleet increased over costs is the of imposition to quarter. It The The profit earn in added continue the renewable generation Facilities, impacted the an operating by In XXX.X quarter peak operating production high in from higher with approximately below mitigated As period constraint transmission the by million commissioned or a as averages that generic reminder, seasonality million, the operating approximately Existing was more during which ERCOT X.X facilities representing the long-term third compares the costs is benefited divisional area results same experience however renewables likely same of utility in facilities. and million Wind and generation production and which well time. our primarily Texas added Coastal XX.X general, over its year, the facilities in be with to of months, basis congestion million group vicinity investments and in operating first expected to will appears

staffing dividends which approximately as came period. expenses administrative the have investment received a $X.XX to compares increased the the in prior in increase. incurred our In at expenses million as strong which X relative provide of our well primarily incremental to renewable from our timing to higher year, $X.XX relating continues results. benefited energy per earnings Corporate from in share adjusted comparative net to Atlantica, second quarter by Lastly, X% in group QX total, expenses

Moving the capital plan year. onto our for

majority spend with completed XXXX, acquisition the the related Water Power. targeting $X.X New in completion the of to over capital of For acquisition Kentucky York pending Algonquin is billion and Liberty to

of deployed of improve New including York remains plan resiliency the reliability, over closing and track. XXX billion capital capital of safety, Year-to-date into and invested million network. to Our Liberty the over investments for we water, million on have $X.X organic XXX the

is rating Liberty issuer our our regulated debt business. investment our that I'm inaugural rating. report We maintaining our end, long-term believe Utilities an on that access assigned of for and on broaden to which BaaX this Moody's rating financing capital. to make our support credit predicated continue We will the further regulated BBB good the primary grade and our progress a holding to for that cost plan strong balance markets Co, in sheet year, to resilient the company pleased of further will business To capital has targeting competitive

plan, to from received we this strong renewable we As diversity us. completion to look well, forward to monetization commenced with potential earlier financing year a over is The we have available sources asset 'XX continuing progress funding market. of interest process the

costs bonds to of related seeking related Missouri last are the Asbury weather utility We under statute Midwest to extreme plant. for issue and year's tariff securitization event balances retirement to coal the

by financeable decision on We the expect quantum the public Missouri service of the month. this commission the later

program ATM with strong to uptake, programs we supporting equity and reactivate base needs. expect DRIP to program continues see both our Our

some market Lastly, sides has both we continue border, to on of monitor seen recently hybrid the which positive momentum. the

available remains also liquidity position Our $X.X liquidity. billion quarter with ending strong, the of approximately

credit The credit to was the for highlighting, year Also During the in term. extension its our market. X the five the strong credit energy revolving expected. Company's and in years fixed and five our approximately group renewable limited Along facility refinancing its extended for well improvements are near pricing along strong positioned against interest with also terms. revolving being of debt term with short-term we from bank to facility, million support XXX group increasing for quarter, our subsequent extended and billion quarter, rate liquidity, regulated a upsized oversubscribed shocks it XX% with well additional meaningful

provide XXXX things a EPS adjusted brief Before I'd update to turning guidance. like net over our Arun, to on

based including adjusted long-term a pricing expect within expectations on $X.XX. continue and normalized underlying range renewable $X.XX production net a resource We These weather EPS to to our consistent averages. be facilities at with assumptions realized of to pattern, XXXX are

to back Kentucky history be the completed of solid earnings, to and that second that, of plans. the will outline it half of which drive acquisition continue be hand on our Arun with We impact strong for have deliver believe also shareholders. return growth, there'll continuing from I Power strategic dividend now COVID-XX we to to will to in no forward our along will operations. XXXX, With look assumed We

Arun Banskota

Arthur. you, Thank

update our the we earning and selling with benefit coming over strategic partner years. to With opportunity both X,XXX and I'm increased to to operating who positioned improved recurring which a scale the wish assets comments we prepared to our Algonquin's of morning, prospect the and expect benefits contribute includes businesses, underway negotiating investors fee. regulated access close portion for institutional and this is from currently that the megawatts, transaction opportunities. This decarbonization get well power, including are excited an contracted of lower Before initiatives. incremental greater our will sustainable out give renewable transformation and by on which want only assets I our a about to invest down to in long-term to accelerate costs,

comments in on process approximately have inaugural Canada to wind portfolio XXX formally I asset last our assets the U.S. advance As interest. consists portfolio we the of and a The continues and received with call, located recycling in four mentioned of assets our of have process megawatts. we The range strong

As future are amount a Key with the process a increasing we platform, scale where for to our stage you growth. can as we generated us appreciate, fulsome provide operational together not you of objectives and and the are development we giving internally of update increasing look concludes. details the at can for cash forward

a expect Asset is recycling renewable enhanced plan, basis. this of to our part and on occur recurring we

up Inflation Reduction formal want of remarks, to wrapping the my on I Act Before XXXX. comment

PTC United energy renewable significant transition. investment clean opportunities The in continued the continue Many throughout ITC and tailwinds is the States. driving the provide see Algonquin of towards Fleet. towards draft the in push to continued XX-year passes legislation which progress the provide the We Greening could for energy the to pleased provisions would the Inflation to of accelerate necessary and are help extension Reduction Act,

Within ITC the PTC expected to benefits renewable developers. split be and customers business, are and between

the platform to this development to benefit ability passed. renewable From in participate ensure benefits, from in levels ITC. X.X stand greenfield billion approximately plan, active will if and Our have our projects in billion and projects announced the legislation X.X for capital is previously we pipeline the increased PTC

legislation remainder projects stage of early wind PTC our pipeline the projects already expected stores natural and ITC a of if renewable solar strategies, days greenfield benefit had gas While are from the our all XX% new late passed. in XXX% and to the

our last megawatt at reminder, pipeline. a of a a As Day, and megawatt hours storage X,XXX greenfield X,XXX pipeline announced of Investor we

In the Fleet should economic Greening the the of investment potential addition, for future even initiatives scale more business increasing within regulated rate become our bearers, opportunities.

Going into sides both the half to second steady we've continued of make on the our of progress business. year,

design, of progressing the Kentucky York closing are Liberty On have we regular New towards closed on and Water Power.

current renewable there environment believe generation. of are side, the represent form lowest renewables growth excited about priced tailwinds and of the a where gas prices commodity we the and growth, renewables number are higher support prospect that given positive the especially that of On

three will growth, dividend build a questions to of on turn from strategic over deliver be call seek sustainability operator Our continue long line. earnings, as foundation and to shareholder the key the and operational steady business and will any the for that, to value. With growth those we pillars I the excellence, term

Operator

you. Thank

Instructions] from questions take Dariusz question telephone now lines. first will Lozny from Bank Our go of from ahead. We Please America. the is [Operator

Dariusz Lozny

the maybe wanted taking Kentucky for discuss And morning. to Power. of talks just little the sale bit question. you detail my I good of on thank progress more a Hi,

the to second be, be? far the perhaps that what transaction might or second any as early of like You maybe at second pace you as clarity detail you And to moment, talks close the year the bit of of would just the the half you half, the as to color transaction of next or it little the might within what expect of the gating of a continue sort give other part middle in mentioned to items later partner, the year. that half Can expect the upcoming close? the

Arun Banskota

Sure, Dariusz. Great question, obviously, right.

two from the look, received X, -- then we and orders Commission an as Virginia the West those and order May from back So were clearly order on received Kentucky know, we we inconsistent. in you July

what seller or as we questions FERC. are closely And those with whether inconsistencies. go there up filing to we is back a come the doing so, AEP cover with commissions resolution of And are in everything working a to in front a to

the of the transaction, So confident on our and remain reason all we've requirements, while just given side. we basically half questions close remain XXXX we, of those to remain said the outstanding ability why the said to is we safe in the that regulatory second

Dariusz Lozny

Okay, kind up R&G metrics of what run fully and might if give just for Thank One it. you from the, can, a perhaps all announced. metrics think bit detail it's or Can you you type of acquisition to once the a about? that contribution that we I multiple like other pivoting what that actual in got project the and be sites EBITDA rate on of across deal any more, color. running that around XXXX any what could little

Arun Banskota

Good, have great that. question, respond Dariusz. I'll to Jeff

Jeff Norman

is Dariusz, that keep in to business. mind our thing I to this as treat an and opportunity think build do first we learn the

So, for run RNG but Gap] can't a our EBITDA expect significant is answer it out XXX,XXX two have and us to approximately per but facilities are once the specific XXX I be day year. [Audio in we rate terms piece the important expected it learning. don't facilities COD MMBtu an in will of more XXXX, building two per contributor, in of give numbers, which around

on give certainly the happy we're scale, a rate. up little follow idea to run so And to bit with of you EBITDA

Arthur Kacprzak

potential and follow opportunities. Yes. reason We'll the Wisconsin, highest items is the in in it's RNG I remarks, said, Dariusz, this that my we're number of transaction about the of prepared couple excited like up. second certainly only

So, is gas and as farms The that. This really given represent RNG give color negative business especially our much grow other platform fleet. development as way sizable I'll say pretty from XXX. a of the significant natural a negative you as to would our dairy only green intensity we see this carbon to

of on and working in we're those front processes commissions business, to of as regulative get projects side four projects regulatory through have those different the online well. the also We

Operator

Ben following [Operator Instructions] go Pham from BMO. ahead. Please Our from is question

Ben Pham

I wanted to follow up.

You sales, you wondering, so mentioned on if update last just an renewable progress with that? was timing quarter asset or had

Arun Banskota

Sure. process. the Ben very very, making look, we on solid are progress

from wanting into what large financial assets even very lived, that of is buy an contracted America. perspective, players global from infrastructure. fact of stronger I macro and to And seeing we strong issues also think some long Asia, interest, in lot these a interest well around we're especially sustainable happening Europe in see a given are in North

we year. process and second So, in seen with of of a of level all in you the have of the robust kinds presentations continues and sometimes management fact hopefully interest, announcement the to forward those half we things, looking making

Ben Pham

Okay. gist I probably I of Mitchell. a expand on the it inconsistent of -- it? last on of That's the Was it's really than more part maybe answer great. inconsistencies was, was, the that that is deeper the to in of And of it mostly I question around that heard salvage O&M is one the that, know, transfer just but that the value value? book value, was calculation

Arthur Kacprzak

operating mean, the right. for asset part, the absolutely Power between end but also the It's Kentucky primarily of issues yes, for most around Well, and now XXXX when retires, the assets there's valuation. the purposes around I you of

Ben Pham

not and really mean, by but then you to -- general I sort the can transfer taking using just that value, mean, a the out your is but deal out just transaction XXXX. you really it kick statement, something it maybe simples O&M it with just in is it And few a it's years? president in down road, the just can I of

Arun Banskota

And we that. can certainly do

finally, like arrive I Eastern and remarks That said in prepared very constructively again, And as a are earlier working we for highly to certainty we more AP a as with come However, remain there's a sure from a that at perspective, risk are to the to And transaction especially we works make our Kentucky. resolution. going of documents. of was in all conclusion. customers we confident my want well, to parties,

Operator

we at no to And I questions register [Operator would Instructions] to over time. meeting have not further turn this Arun. back a like

Arun Banskota

very much you time those line Thank today. stay call operator. who with And our on you, our for for the the on please participate taking disclaimer. Thank that, for

Operator

Our described and most regarding the based on pending this contains risk in subject and information, including, materially recent those our discussion asset EDGAR certain MD&A This earnings, historical and acquisitions, on on and our information. to growth that results website, limited or not capital call expenditures, pending legislation. results cause from available CEDAR but certain expectations and by filed to anticipated our assumptions, is to during forward-looking uncertainties forward-looking could forward-looking recycling including is differ results information actual

assumptions Forward-looking by information not of We or based provided except to and will reliance such management for information. actual should any date expectations, speaks looking information as on disclaim information applicable during assurance between this you any call difference accurate, beliefs, undue explain to obligation any forward information today's to subsequent, prove update of forward-looking and that is place There be of forward-looking call required the law. events projections, and and this no material as opinions, plans, estimates, only of as the looking on date. could be

during ratios, on measure we and including, presented this funds course be certain such measures companies, not addition, therefore, may but call, adjust used adjusted not divisional may standardized measures. have from of may In the of non-GAAP and EPS, EBITDA, per referred in measures limited adjusted to operations share net at for to, adjusted earnings by no and differ similar And is other There companies. to consequently, measures other calculating they non-GAAP by comparable profit. these method operating from methods our

MD&A to call. the conference measures and non-GAAP refer our financial And a more measures, please and measures States, including United our available and information information in reconciliation correspondent the Canada both forward-looking to CEDAR GAAP concludes in on For filed on EDGAR non-GAAP and about most that the website. recent

Operator

lines Thank your participation. Please you. we thank The ended. for at you this disconnect time and conference has now your

Algonquin Power & Utilities (AQN) 12 Aug 222022 Q2 Earnings call transcript