Algonquin Power & Utilities (AQN) Q2 2024 earnings summary

Executive summary

• Announced and completed the sale of the non-hydro renewables business to LS Power for up to $2.5 billion, including $2.28 billion in cash and a $220 million earn-out, as part of a strategic shift to a pure-play regulated utility and optimization of the Atlantica investment.

• Emphasizing a capital-light strategy, reduced capex, and a right-sized dividend to enhance financial self-sufficiency and long-term value creation.

• Focused on strengthening the balance sheet, maintaining a healthy dividend payout ratio (60%-70%), and supporting future earnings growth.

• Reorganization along commodity lines and executive changes, including the appointment of a Chief Transformation Officer and departure of the COO, aim to improve operational efficiency and accountability.

Financial highlights

• Q2 2024 adjusted EBITDA was $311.0 million, up 12% year-over-year; adjusted net earnings were $65.2 million, a 16% increase; adjusted net earnings per share reached $0.09, up 13%.

• Net earnings attributable to shareholders were $200.8 million in Q2, compared to a loss of $253.2 million last year.

• Q2 2024 revenue was $598.6 million, down 5% year-over-year; six-month revenue $1,335.7 million, also down 5%.

• Cash from operations for Q2 was $236.2 million, down 10% year-over-year; six-month cash from operations up 24%.

• Dividend per share reduced to $0.065 for Q3 2024, annualized at $0.26.

Outlook and guidance

• Proceeds from the renewables sale expected to close in late 2024 or early 2025, with net cash proceeds of $1.6 billion after debt repayment and adjustments.

• Capital expenditures will be restrained to slightly above maintenance and essential requirements until returns improve.

• 2025 earnings will be impacted by delays in rate case filings, with improvements expected in 2026 as regulatory lag is reduced.

• Over $1 billion in assets are not yet authorized in rates or receiving optimized regulatory treatment, supporting a capital-light path to earnings growth.

• Focus on reducing external funding needs and supporting a sustainable dividend payout.