Hydro One (H) Q2 2024 earnings summary

Executive summary

• Q2 2024 basic EPS rose to $0.49 from $0.44 year-over-year, driven by higher OEB-approved rates, increased peak demand, and higher energy consumption, partially offset by higher taxes, depreciation, and financing charges.

• Net income attributable to common shareholders increased 10.2% year-over-year to $292 million, with revenues up 9.4% to $2,031 million and revenues net of purchased power up 3% to $1,091 million.

• OM&A expenses decreased by 5.1% year-over-year, reflecting productivity initiatives and one-time insurance proceeds.

• Major transmission projects, including the St. Clair and Chatham to Lakeshore lines, are progressing, with the latter coming in a year early and $31 million under budget.

• The company continues to focus on sustainability, reducing Scope 1 GHG emissions by 24% since 2018 and issuing $2.4 billion in sustainable and green bonds.

Financial highlights

• Q2 2024 basic EPS: $0.49 (Q2 2023: $0.44); net income: $292 million (Q2 2023: $265 million).

• Revenues: $2,031 million in Q2 2024, up from $1,857 million in Q2 2023; revenues net of purchased power up 3% year-over-year.

• OM&A expenses down 5.1% year-over-year.

• Capital investments in Q2: $818 million, up 26% year-over-year; assets placed in service: $526 million, up 27.4%.

• Quarterly dividend declared at $0.3142 per share, payable September 27, 2024.

Outlook and guidance

• EPS growth of 5%-7% expected through 2027, based on normalized 2022 EPS of $1.61.

• Rate base expected to grow at ~6% CAGR from 2022 to 2027, reaching $31.8 billion by 2027.

• Projected capital investments of $3,152 million in 2024, with annual investments above $2.3 billion through 2027.

• Effective tax rate expected to remain between 13%-16% for the remainder of the JRAP period.

• No equity issuance anticipated for planned capital investments; growth is self-funded.