Algonquin Power & Utilities Corp. Q3 FY2024 earnings call

• Strategic transition: In 2023, the company decided to focus on being a pure-play regulated utility. In 2024, it has advanced transactions like Atlantica's expected close on December 12, 2024, and the sale of renewables business (excluding Hydro fleet) expected in late 2024 or early 2025. - Regulated business progress: Completed rollout of customer first SAP-based IT platform, rolled out next phase of business services, added regulated experience to Board and executive leadership, reorganized utility structure by commodity. - Rate cases: Filed rate cases for Empire Electric in Missouri, CalPeco in California, and will file for Litchfield Park in Arizona in first half of 2025. Empire Electric Missouri rate case filed with request to increase rate base by ~$534 million and revenue requirement increase of ~$92.1 million. CalPeco rate case filed with request to increase rate base by ~$154 million and revenue requirement increase of ~$39.8 million. Litchfield Park rate case aims to increase rate base by ~$85 million.

For continuing operations, which includes the regulated business, hydro business, and ownership stake in Atlantica, there was year-over-year growth in revenue of 1% and adjusted EBITDA of 4% in the third quarter. Adjusted net earnings and adjusted net earnings per share decreased by 5% and 20% respectively year-over-year. On a segmented basis, adjusted EBITDA growth for the regulated business in the third quarter was up 3% year-over-year due to the implementation of new rates at several electric, gas, and water facilities, but was partially offset by higher operating expenses. Revenue contribution details: Continuing operations' revenue growth was from regulated business electric, natural gas, and water facilities implementing new rates, but offset by lower pass-through commodity costs.

• Not providing 2025 guidance at this point, will provide when reporting fourth quarter results. - Atlantica transaction expected to close on December 12, 2024. Renewables business (excluding Hydro fleet) sale expected in fourth quarter 2024 or first quarter 2025. - 2024 is the year with the largest number of concurrent rate cases in company history, with 13 rate reviews pending representing approximately $205 million in revenue request.

• System implementation caused short-term regulatory lag and impacted timing of rate cases. - Transaction net proceeds may vary due to items such as construction spending variances, tax credit timing and monetization. - Uncertainty in rate case outcomes as they take time to resolve and results are not guaranteed.

Q: Rupert Merer asked about rate case submissions, including details on the $700 million target recovery and the $300 million to come, and impact of Empire rate case on 2025 and retroactivity.

A: Darren Myers said they're not going to walk through the remaining $300 million, Chris Huskilson said the number is a moving target and will occur into 2027, and Chris Huskilson also said Empire rate case history is about 12 months, prospective with small impact in 2025 and full benefit in 2026.

Q: Mark Jarvi asked about base set of earnings erosion in 2025 with regulatory lag and deferral of depreciation.

A: Chris Huskilson said they're not giving guidance yet, but have rate cases settling this year that will go into next year, and are working on OpEx and efficiencies, will provide further color in fourth quarter results.

Q: Mark Jarvi asked about advocating for riders in Missouri rate case to minimize regulatory lag.

A: Chris Huskilson said in Missouri they have PISA opportunity and listed items in the case related to fuel adjustment mechanism and other items.

Q: Mark Jarvi asked about New Hampshire rate case path forward.

A: Chris Huskilson said they're expecting to settle both cases and have had good discussions with interveners and staff, optimistic for conclusion.

Q: Sean Steuart asked about Hydro process update.

A: Chris Huskilson said they haven't started the process yet, focused on selling bigger asset base and renewables, will go to market with hydro in first half of next year, sell if can create economic value. Darren Myers added they want to maximize value and will time it when they have more bandwidth next year.

Q: Rob Hope asked about use of proceeds from hydro assets, purchase price movement, and net proceeds offsetting debt.

A: Darren Myers said committed to investment-grade rating, will use proceeds for flexibility, self-funding, and invest in business; Chris Huskilson said will test between value inside business and reinvestment value; Darren Myers explained net proceeds range change due to construction JVs and project timing, and $150 million net proceeds from tax attributes in late 2025 with project push-outs.