Algonquin Power & Utilities Corp. Announces 2022 Fourth Quarter and Full Year Financial Results
"Despite various challenges throughout the year, we ended 2022 on stable footing, with our Adjusted Net Earnings1 per common share having met the Company's revised guidance estimate," said
Fourth Quarter and Full Year Financial Highlights
- Fourth quarter Adjusted EBITDA1 of
$358.3 million , an increase of 20%; - Fourth quarter Adjusted Net Earnings1 of
$151.0 million , an increase of 10%; - Fourth quarter Adjusted Net Earnings1 per common share of
$0.22 , an increase of 5%; - Annual Adjusted EBITDA1 of
$1,256.8 million , an increase of 17%; - Annual Adjusted Net Earnings1 of
$474.9 million , an increase of 6%; - Annual Adjusted Net Earnings1 per common share of
$0.69 , a decrease of 3%, in each case on a year-over-year basis.
All amounts in |
Three months ended |
Twelve months ended |
|||||
2022 |
2021 |
Change |
2022 |
2021 |
Change |
||
Revenue |
$ |
748.0 |
$ 592.0 |
26 % |
$ 2,765.2 |
|
22 % |
Net earnings (loss) attributable to shareholders |
(74.4) |
175.6 |
(142) % |
(212.0) |
264.9 |
(180) % |
|
Per common share |
(0.11) |
0.27 |
(141) % |
(0.33) |
0.41 |
(180) % |
|
Cash provided by operating activities |
214.6 |
126.5 |
70 % |
619.1 |
157.5 |
293 % |
|
Adjusted Net Earnings1 |
151.0 |
137.0 |
10 % |
474.9 |
449.0 |
6 % |
|
Per common share |
0.22 |
0.21 |
5 % |
0.69 |
0.71 |
(3) % |
|
Adjusted EBITDA1 |
358.3 |
298.3 |
20 % |
1,256.8 |
1,076.3 |
17 % |
|
Adjusted Funds from Operations1 |
258.4 |
221.2 |
17 % |
864.1 |
757.9 |
14 % |
|
Dividends per common share |
0.1808 |
0.1706 |
6 % |
0.7130 |
0.6669 |
7 % |
|
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|
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1 Please refer to "Non-GAAP Measures" below for further details. |
Fourth Quarter Highlights
-
Pending Acquisition of
Kentucky Power Company andAEP Kentucky Transmission Company, Inc. — OnOctober 26, 2021 ,Liberty Utilities Co. , an indirect subsidiary of AQN, entered into an agreement with American Electric Power Company, Inc. andAEP Transmission Company, LLC to acquireKentucky Power Company andAEP Kentucky Transmission Company, Inc. (the "Kentucky Power Transaction"). OnDecember 15, 2022 , theU.S. Federal Energy Regulatory Commission ("FERC") issued an order denying, without prejudice, authorization for the Kentucky Power Transaction. OnFebruary 14, 2023 , a new application was filed withFERC for approval of the Kentucky Power Transaction. Closing of the Kentucky Power Transaction remains subject to the satisfaction or waiver of certain conditions precedent, which include the approval of the Kentucky Power Transaction byFERC and clearance under the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (as the clearance received previously has lapsed). -
Inaugural Asset Recycling Transaction —
On
December 29, 2022 , the Company closed the previously-announced sale of ownership interests in a portfolio of operating wind facilities in theU.S. andCanada toInfraRed Capital Partners , an international infrastructure investment manager that is part of SLC Management. The transaction consisted of the sale of (1) a 49% ownership interest in three operating wind facilities in theU.S. totaling 551 MW of installed capacity, and (2) an 80% ownership interest in the 175 MW operating Blue Hill Wind Facility inSaskatchewan . Total cash proceeds to the Company were approximately$277.5 million for theU.S. facilities and approximatelyC$108.6 million for the Blue Hill Wind Facility (subject to certain potential future post-closing adjustments). A gain on disposition of$62.8 million was recognized and included in gain on sale of renewable assets on the Company's consolidated statements of operations. This gain is also included in the Company's Adjusted Net Earnings and Adjusted EBITDA for 2022 (see "Non-GAAP Measures" below).
Subsequent Events
-
Investor Update
– On
January 12, 2023 , the Company announced decisive actions to support its long-term energy transition strategy. These actions include a reset of its quarterly dividend from$0.1808 to$0.1085 per common share, reduced capital intensity, intention to raise approximately$1 billion in asset sales with announcements targeted in 2023, and a commitment to a BBB credit rating. -
Credit Rating Affirmations
– In
January 2023 , S&P and Fitch affirmed their existing ratings and outlook. In addition, S&P indicated that its negative outlook reflects the execution risk associated with the Company's asset recycling strategy. InFebruary 2023 , DBRS affirmed its existing ratings and removed AQN from "Under Review with Developing Implications", updating the outlook to "Stable". -
Atlantica Strategic Review
– On
February 21, 2023 , (NASDAQ: AY) ("Atlantica") announced that its board of directors has commenced a strategic review process. AQN, which owns approximately 42% of Atlantica, supports the commencement of that process.Atlantica Sustainable Infrastructure plc
Other 2022 Highlights
-
Acquisition and Integration of Liberty NY Water (formerly
New York American Water Company Inc. ) — EffectiveJanuary 1, 2022 , the Company closed the acquisition ofLiberty Utilities (New York Water) Corp. ("Liberty NY Water") from American Water Works Company, Inc. for a purchase price of approximately$609 million . Headquartered inMerrick, NY , Liberty NY Water is a regulated water and wastewater utility serving approximately 127,000 customer connections across eight counties in southeasternNew York . Integration of Liberty NY Water into the Company'sEast Region is proceeding well. -
Completion of the Blue Hill Wind Facility
– On
April 14, 2022 , the Renewable Energy Group achieved full commercial operations at its 175 MW Blue Hill Wind Facility, located in southwestSaskatchewan . The Blue Hill Wind Facility is the Renewable Energy Group's 15th wind powered electric generating facility and is expected to generate approximately 683 GW-hrs of energy per year, with the output being sold through a long-term power purchase agreement with an investment grade rated entity. As noted above, the Company subsequently sold an 80% ownership interest in the Blue Hill Wind Facility as part of its inaugural asset recycling transaction.
Outlook
-
Reiterate Estimated 2023 Adjusted Net Earnings Per Common Share –
The Company reiterates its previously-disclosed estimate of Adjusted Net Earnings per common share for the 2023 fiscal year within a range of
$0.55-$0.61 (see "Non-GAAP Measures"). Estimated 2023 Adjusted Net Earnings per common share is calculated excluding the impact of gains or losses from asset dispositions, but is otherwise calculated in a manner consistent with the description set out under "Caution Concerning Non-GAAP Measures – Adjusted Net Earnings" in AQN's Management Discussion & Analysis for the three and twelve months endedDecember 31, 2022 (the "Annual MD&A"), which will be available on SEDAR, EDGAR and the Company's web site. In addition, the Company's estimate for 2023 Adjusted Net Earnings per common share is based on, and should be read in conjunction with, the assumptions set out under "Outlook – Estimated 2023 Adjusted Net Earnings Per Common Share" and "Caution Concerning Forward-Looking Statements and Forward-Looking Information" in the Annual MD&A. Please also refer to "Caution Regarding Forward-Looking Information" and "Non-GAAP Measures" below. -
Capital Investment Expectations
–
Assuming closing of the
$2.646 billion Kentucky Power Transaction, the Company expects to spend approximately$3.6 billion on capital investment opportunities in the 2023 fiscal year. Of this amount, approximately$3.3 billion is expected to be spent by theRegulated Services Group and approximately$300 million is expected to be spent by the Renewable Energy Group.
AQN will file its Annual Consolidated Financial Statements, Annual MD&A, and Annual Information Form, each for the year ended
Earnings Conference Call
AQN will hold an earnings conference call at
Date: |
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Time: |
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Conference Call: |
Toll Free Dial-In Number |
1-800-806-5484 |
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Toll Dial-In Number |
(416) 340-2217 |
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Event Passcode |
6510489# |
Webcast: |
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Presentation also available at: www.algonquinpowerandutilities.com |
About
Visit AQN at www.algonquinpowerandutilities.com and follow us on Twitter @AQN_Utilities.
Caution Regarding Forward-Looking Information
Certain statements included in this news release constitute ''forward-looking information'' within the meaning of applicable securities laws in each of the provinces and territories of
Non-GAAP Measures
AQN uses a number of financial measures to assess the performance of its business lines. Some measures are calculated in accordance with generally accepted accounting principles in
The terms "Adjusted Net Earnings", "Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization" (or "Adjusted EBITDA"), and "Adjusted Funds from Operations", which are used in this news release, are non-GAAP financial measures. An explanation of each of these non-GAAP financial measures can be found in the section entitled "Caution Concerning Non-GAAP Measures" in the Annual MD&A, which section is incorporated by reference into this news release, and a reconciliation to the most directly comparable
AQN does not provide reconciliations for forward-looking non-GAAP financial measures as AQN is unable to provide a meaningful or accurate calculation or estimation of reconciling items and the information is not available without unreasonable effort. This is due to the inherent difficulty of forecasting the timing or amount of various events that have not yet occurred, are out of AQN's control and/or cannot be reasonably predicted, and that would impact the most directly comparable forward-looking
Reconciliation of Adjusted EBITDA to Net Earnings
The following table is derived from and should be read in conjunction with the consolidated statement of operations. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted EBITDA and provides additional information related to the operating performance of AQN. Investors are cautioned that this measure should not be construed as an alternative to
|
Three months ended |
|
Twelve months ended |
||||
(all dollar amounts in $ millions) |
2022 |
|
2021 |
|
2022 |
|
2021 |
Net earnings (loss) attributable to shareholders |
$ (74.4) |
|
$ 175.6 |
|
$ (212.0) |
|
$ 264.9 |
Add (deduct): |
|
|
|
|
|
|
|
Net earnings attributable to the non-controlling interest, exclusive |
6.0 |
|
2.3 |
|
18.9 |
|
16.1 |
Income tax expense (recovery) |
(28.6) |
|
1.8 |
|
(61.5) |
|
(43.4) |
Interest expense |
78.0 |
|
50.1 |
|
278.6 |
|
209.6 |
Other net losses2 |
2.1 |
|
11.9 |
|
21.4 |
|
22.9 |
Unrealized loss (gain) on energy derivatives included in revenue |
(2.1) |
|
0.6 |
|
0.9 |
|
5.4 |
Asset impairment charge |
159.6 |
|
— |
|
159.6 |
|
— |
Impairment of equity-method investee |
75.9 |
|
— |
|
75.9 |
|
— |
Pension and post-employment non-service costs |
4.6 |
|
4.9 |
|
11.0 |
|
16.3 |
Change in value of investments carried at fair value3 |
14.7 |
|
(61.0) |
|
499.1 |
|
122.4 |
Impacts from the Market Disruption Event4 on the Senate Wind |
— |
|
— |
|
— |
|
53.4 |
Costs related to tax equity financing |
— |
|
1.4 |
|
— |
|
5.7 |
Gain on derivative financial instruments |
(6.4) |
|
(1.1) |
|
(4.4) |
|
(4.4) |
Loss on foreign exchange |
14.1 |
|
1.0 |
|
13.8 |
|
4.4 |
Depreciation and amortization |
114.8 |
|
110.8 |
|
455.5 |
|
403.0 |
Adjusted EBITDA5 |
$ 358.3 |
|
$ 298.3 |
|
$ 1,256.8 |
|
$ 1,076.3 |
|
|
1 |
Amounts for the three months ended |
2 |
See Note 19 in the annual consolidated financial statements. |
3 |
See Note 8 in the annual consolidated financial statements. |
4 |
The "Market Disruption Event" refers to the significantly elevated pricing that persisted in the |
5 |
Amounts for the three and twelve months ended |
Reconciliation of Adjusted Net Earnings to Net Earnings
The following table is derived from and should be read in conjunction with the consolidated statement of operations. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted Net Earnings and provides additional information related to the operating performance of AQN. Investors are cautioned that this measure should not be construed as an alternative to consolidated net earnings in accordance with
The following table shows the reconciliation of net earnings to Adjusted Net Earnings exclusive of these items:
|
|
Three months ended |
|
Twelve months ended |
||||
(all dollar amounts in $ millions except per share information) |
|
2022 |
|
2021 |
|
2022 |
|
2021 |
Net earnings (loss) attributable to shareholders |
$ |
(74.4) |
$ |
175.6 |
$ |
(212.0) |
$ |
264.9 |
Add (deduct): |
|
|
|
|
|
|
|
|
Gain on derivative financial instruments |
|
(6.4) |
|
(1.1) |
|
(4.4) |
|
(4.4) |
Other net losses2 |
|
2.1 |
|
11.9 |
|
21.4 |
|
22.9 |
Asset impairment charge |
|
159.6 |
|
— |
|
159.6 |
|
— |
Impairment of equity-method investee |
|
75.9 |
|
— |
|
75.9 |
|
— |
Loss on foreign exchange |
|
14.1 |
|
1.0 |
|
13.8 |
|
4.4 |
Unrealized loss (gain) on energy derivatives included in revenue |
|
(2.1) |
|
0.6 |
|
0.9 |
|
5.4 |
Change in value of investments carried at fair value3 |
|
14.7 |
|
(61.0) |
|
499.1 |
|
122.4 |
Impacts from the Market Disruption Event on the Senate Wind |
|
— |
|
— |
|
— |
|
53.4 |
Costs related to tax equity financing and other adjustments |
|
— |
|
1.4 |
|
— |
|
5.7 |
Adjustment for taxes related to above |
|
(32.5) |
|
8.6 |
|
(79.4) |
|
(25.7) |
Adjusted Net Earnings4 |
$ |
151.0 |
$ |
137.0 |
$ |
474.9 |
$ |
449.0 |
Adjusted Net Earnings per common share |
$ |
0.22 |
$ |
0.21 |
$ |
0.69 |
$ |
0.71 |
|
|
1 |
Amounts for the three months ended |
2 |
See Note 19 in the annual consolidated financial statements. |
3 |
See Note 8 in the annual consolidated financial statements. |
4 |
Amounts for the three and twelve months ended |
Reconciliation of Adjusted Funds from Operations to Cash Provided by Operating Activities
The following table is derived from and should be read in conjunction with the consolidated statement of operations and consolidated statement of cash flows. This supplementary disclosure is intended to more fully explain disclosures related to Adjusted Funds from Operations and provides additional information related to the operating performance of AQN. Investors are cautioned that this measure should not be construed as an alternative to cash provided by operating activities in accordance with
The following table shows the reconciliation of cash provided by operating activities to Adjusted Funds from Operations exclusive of these items:
|
Three months ended |
|
Twelve months ended |
||||
(all dollar amounts in $ millions) |
2022 |
|
2021 |
|
2022 |
|
2021 |
Cash provided by operating activities |
$ 214.6 |
|
$ 126.5 |
|
$ 619.1 |
|
$ 157.5 |
Add (deduct): |
|
|
|
|
|
|
|
Changes in non-cash operating items |
41.2 |
|
84.4 |
|
221.6 |
|
522.0 |
Production based cash contributions from non-controlling interests |
— |
|
— |
|
6.2 |
|
4.8 |
Impacts from the Market Disruption Event on the Senate Wind |
— |
|
— |
|
— |
|
53.4 |
Costs related to tax equity financing |
— |
|
0.5 |
|
(0.2) |
|
5.7 |
Acquisition-related costs |
2.6 |
|
9.8 |
|
17.4 |
|
14.5 |
Adjusted Funds from Operations2 |
$ 258.4 |
|
$ 221.2 |
|
$ 864.1 |
|
$ 757.9 |
|
|
1 |
Amounts for the three months ended |
2 |
Amounts for the three and twelve months ended |
|
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