Algonquin Power & Utilities (AQN) Q2 2024 earnings summary

Executive summary

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

• Proceeds from the sale, along with Atlantica shares, will be used to recapitalize the balance sheet, reduce debt, and support future growth.

• Strategic focus on operational discipline, capital-light strategy, reduced capex, and unlocking value from regulated assets not yet in rates.

• Board reduced the dividend to achieve a healthier payout ratio (60-70%) and limit equity raises, enhancing financial self-sufficiency.

• Emphasis on a strong balance sheet, improved execution, and long-term value creation.

Financial highlights

• Q2 2024 adjusted EBITDA was $311 million, up 12% year-over-year; adjusted net earnings were $65.2 million, up 16%; adjusted EPS was $0.09, up 13%.

• Net earnings attributable to shareholders were $200.8 million in Q2 2024, compared to a loss of $253.2 million in Q2 2023.

• 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 in late 2024 or early 2025, with net cash proceeds of ~$1.6 billion after debt and adjustments.

• 2025 earnings will be impacted by delays in rate case filings, with improvements expected in 2026.

• Capital expenditures to be limited to just above maintenance, safety, and environmental needs for the next few years.

• Over $1 billion in assets not yet authorized in rates or receiving optimized regulatory treatment.

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