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Algonquin Power & Utilities Corp T.AQN

Alternate Symbol(s):  AQN | T.AQN.PR.A | T.AQN.PR.D | AGQPF

Algonquin Power & Utilities Corp. is a Canada-based diversified international generation, transmission, and distribution company. The Company through its two business groups, the Regulated Services Group, and the Renewable Energy Group, provides sustainable energy and water solutions through its portfolio of electric generation, transmission, and distribution utility investments to over one million customer connections, largely in the United States and Canada. The Company is engaged in renewable energy through its portfolio of long-term contracted wind, solar, and hydroelectric generating facilities. The Company owns, operates, and/or has net interests in over four gigawatts (GW) of installed renewable energy capacity. The Company is focused on its expanding global pipeline of renewable energy and electric transmission development projects, organic growth within its rate-regulated generation, distribution and transmission businesses, and the pursuit of accretive acquisitions.


TSX:AQN - Post by User

Post by bmbruceon May 08, 2020 7:44am
276 Views
Post# 31001754

RBC.. first impressions on earnings

RBC.. first impressions on earningsFirst Glance: Modest Q1 shortfall, 10% dividend hike, and guidance reduced slightly Impact: Modestly Negative First impression Modest Q1/20 EPS shortfall. Algonquin Powers Q1/20 Adjusted EPS of $0.19 was modestly lower than our estimate and consensus of $0.21. Adjusted EBITDA of $222 million (excluding $20 million of HLBV income) was just shy of our estimate of $226 million. The variance to our estimate was largely due to higher-than-expected overhead costs and weaker-than-expected contribution from the renewable generation division (production was 6% below the long-term average). We note that the mild winter had a negative EBITDA impact of ~$8 million compared to Q1/19. Please refer to Exhibit 1 for additional details. COVID-19 delays construction and increases receivables. Management noted that some of the policies put in place (e.g., suspended disconnection activities for non-payment, and waived late payment charges) have resulted in an increase in overdue utility bills. Management also expects COVID-19 to delay construction, though it still expects the Maverick Creek Wind project in Texas to qualify for 100% of the tax credits. Management is looking to partially mitigate the impact by targeting ~$15 million of operating and maintenance cost savings for the remainder of the year. Taking action on COVID-19. The company reduced its 2020 capex plan to $1.301.75 billion, deferring $100300 million of capex that was originally planned for 2020 into 2021. We believe it will not have a material impact on earnings. The company also secured an additional $1.6 billion of liquidity, ensuring that the company can continue to move forward with its updated 2020 capital plan without needing to access the capital markets. Low end of guidance reduced. In light of the unfavourable weather impact in Q1/20 and the impact of COVID-19, the company has reduced the low end of its 2020 Adjusted EPS guidance to $0.650.70 (from $0.680.70). 10% dividend increase as expected. The company increased the quarterly dividend to $0.1551/share ($0.6204/share annualized) from $0.141/share ($0.564/share annualized). This is consistent with its target dividend growth rate of 10% through 2021. Conference call: Friday, May 8, at 10:00AM ET. The dial-in number is 1-800-319-4610. We expect investors to focus on the impacts of COVID-19, construction progress, the ongoing senior management transition plan (CEO and CFO), and the pending acquisitions.
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