Release Date: May 09, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Algonquin Power & Utilities Corp (AQN, Financial) reported a 39% increase in first quarter adjusted net earnings from continuing operations, reaching $111.6 million.
- The company successfully implemented new rates, contributing $15.7 million to the Regulated Services Group's net earnings.
- Algonquin Power & Utilities Corp (AQN) benefited from lower interest expenses, saving $13.6 million due to debt repayment.
- The Southwest Power Pool approved a significant investment in transmission projects, with $750 million to $800 million dedicated to strengthening the Empire District Electric service area.
- The company plans to provide a forward-looking multi-year update on June 3, which will include projected adjusted net EPS ranges for 2025, 2026, and 2027.
Negative Points
- Algonquin Power & Utilities Corp (AQN) is dealing with multiple investigations related to billing issues in Missouri, Arkansas, and an audit in New Hampshire.
- The company experienced a decrease of $22.7 million in adjusted net earnings due to the removal of Atlantica dividends.
- There are ongoing challenges with customer service and billing issues, which are under investigation by the Missouri Commission.
- The company is facing dissynergies related to the sale of its renewable group, impacting operational costs.
- Algonquin Power & Utilities Corp (AQN) has yet to consistently evidence the practices that set premium utilities apart, indicating room for improvement in operational efficiency.
Q & A Highlights
Q: Rod, you've been with Algonquin for a couple of months now. What impactful changes have you made so far?
A: Rod West, CEO: My focus has been on setting a vision for a premium utility, emphasizing cost reduction, stakeholder engagement, and improving customer outcomes. We're working on lowering our cost profile to allow more capital and operational flexibility. The goal is to enhance shareholder returns and customer satisfaction through disciplined execution.
Q: Regarding the SPP projects, can you provide clarity on the capital involved and the timeline for spending?
A: Rod West, CEO: We haven't disclosed specifics beyond what's public. However, if we execute successfully, we anticipate capturing additional CapEx opportunities. The timeline for capital spending will depend on project progression and acceptance of construction notices.
Q: Can you update us on the investigations in Arkansas and New Hampshire related to billing issues?
A: Rod West, CEO: The investigations are related to billing issues from a system overhaul. We're working with regulators to resolve these issues and improve stakeholder engagement. The New Hampshire audit is not customer-related, but we're committed to addressing all concerns.
Q: Any updates on the potential divestiture of the Hydro portfolio?
A: Rod West, CEO: We're open to transactions if they are value accretive, considering balance sheet and strategic benefits. There's no specific timeline, but we're monitoring market conditions for potential opportunities.
Q: Can you discuss the CRM implementation and its impact on cost savings?
A: Sarah MacDonald, Chief Transformation Officer: The CRM implementation aims to improve customer experience and integration. While cost savings are expected, the focus is on optimizing the system for better customer outcomes. Cost benefits will be reflected in overall O&M numbers.
Q: Are there still added costs related to previous billing issues, and are current operating costs representative of future expectations?
A: Brian Chin, Interim CFO: Most extra costs were recorded in Q4, primarily as bad debt expense. The trend is improving, and we expect these costs to temper off, making current operating costs more representative of future expectations.
Q: How is Algonquin addressing customer affordability amidst market and inflation challenges?
A: Rod West, CEO: We're focused on lowering our cost profile to minimize customer bill impacts. Our strategy involves capital and O&M discipline, benchmarking against best-in-class utilities to ensure responsible stewardship and customer-centric investments.
Q: Can you provide an update on the New Hampshire settlements and the path forward for rate filings?
A: Brian Chin, Interim CFO: We have an approved settlement for Granite State and are negotiating for Energy North. For Granite State, we can file a new rate case on January 1, 2026. Similar timelines are expected for Energy North.
Q: What's the status of the CalPeco interim rate application?
A: Sarah MacDonald, Chief Transformation Officer: The application is feasible, and we're responding to inquiries. However, California's regulatory process is slow, so we can't predict when we'll receive feedback.
Q: How are you dealing with dissynergies from the renewable group sale, and are there plans to lower costs further?
A: Brian Chin, Interim CFO: We had $18 million in dissynergies last year, with less impact this quarter. We're executing greater operational discipline, and the removal of dissynergies will reflect in our outlook.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
