Hydro One (H) Q3 2024 earnings summary

Executive summary

• Q3 2024 basic EPS rose to $0.62 from $0.60 year-over-year, driven by higher OEB-approved rates, increased demand, and strong revenue growth in both transmission and distribution segments, partially offset by higher taxes, depreciation, and financing charges.

• Net income attributable to common shareholders increased 3.9% year-over-year to $371 million, with consolidated revenues up 13.3% to $2,192 million and revenues net of purchased power up 6% to $1,145 million.

• Capital investments surged 21.2% to $773 million, supporting grid reliability, growth, and major transmission projects such as Waasigan and Chatham to Lakeshore, which are progressing ahead of schedule and under budget.

• Major regulatory and government approvals were secured for key transmission projects, including settlements for B2M LP, NRLP, and the Waasigan Transmission Line Environmental Assessment.

• Recognized for responsible business practices and safety, with national awards and community initiatives.

Financial highlights

• Q3 2024 revenues rose 13.3% year-over-year to $2,192 million; net income was $371 million, up 3.9%; capital investments totaled $773 million, up 21.2%.

• Revenue net of purchased power increased 6% year-over-year; transmission up 5.7%, distribution up 16.7%.

• Operating, maintenance, and administration expenses were nearly flat at $294 million; depreciation expense rose 6% to $263 million.

• Interest expense increased 10.5% year-over-year, mainly from higher rates and more long-term debt.

• Quarterly dividend declared at $0.3142 per share, payable December 31, 2024.

Outlook and guidance

• Maintaining 5%-7% compound annual EPS growth guidance for 2023–2027, with 2027 EPS targeted at $2.26, based on normalized 2022 EPS of $1.61.

• 2023–2027 rate base CAGR expected at ~6%; average annual dividend growth targeted at ~6%.

• Capital investments projected at $3,152 million for 2024, with future investments estimated at $3,119 million in 2025, $2,667 million in 2026, and $2,362 million in 2027.

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

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