"It was a challenging third quarter. Despite year-over-year growth in Adjusted EBITDA1, our results for the quarter came in below our expectations and were negatively impacted by increasing interest rates and the timing of tax incentives related to certain renewable energy projects. Our underlying businesses remain strong; however, we are not immune to the macroeconomic environment. Our team is focused on identifying and implementing the necessary adjustments while executing on our three pillars of Growth, Operational Excellence and Sustainability to drive shareholder value over the long-term," said
Banskota continued, "Although our earnings were challenged, this past quarter AQN took important strides executing on our growth objectives across both the regulated and renewable sides of our business. On the regulated side, we are one step closer to completing the pending
- Adjusted EBITDA1 of
$276.1 million , an increase of 10% compared to the third quarter of 2021. - Adjusted Net Earnings1 of
$73.5 million , a decrease of 25% compared to the third quarter of 2021. Adjusted Net Earnings1 was negatively impacted year-over-year by higher interest expense of$23.3 million as a result of borrowings to support growth and higher interest rates. The Company also had lower year-over-year recognition of investment tax credits and production tax credits of$17.1 million , which included revised estimates associated with renewable projects that are now expected to be placed in service in 2023. - Adjusted Net Earnings1 per common share of
$0.11 , a decrease of 27% compared to the third quarter of 2021.
All amounts in | Three months ended | |||||||
2022 | 2021 | Change | ||||||
Revenue | $ | 666.7 | $ | 528.6 | 26 % | |||
Net earnings (loss) attributable to shareholders | (195.2) | (27.9) | (600) % | |||||
Per common share | (0.29) | (0.05) | (480) % | |||||
Cash provided by operating activities | 102.9 | 174.7 | (41) % | |||||
Adjusted Net Earnings1 | 73.5 | 97.6 | (25) % | |||||
Per common share | 0.11 | 0.15 | (27) % | |||||
Adjusted EBITDA1 | 276.1 | 252.0 | 10 % | |||||
Adjusted Funds from Operations1 | 205.5 | 170.2 | 21 % | |||||
Dividends per common share | 0.1808 | 0.1706 | 6 % |
_____________________________________ |
1 Please refer to "Non-GAAP Measures" at the end of this document for further details. |
- Progress Towards Closing the Kentucky Power Acquisition — On
October 26, 2021 ,Liberty Utilities Co. ("Liberty"), an indirect subsidiary of AQN, entered into an agreement with American Electric Power Company, Inc. ("AEP") andAEP Transmission Company, LLC to acquireKentucky Power Company andAEP Kentucky Transmission Company, Inc. for a total purchase price of approximately$2.846 billion , including the assumption of approximately$1.221 billion in debt (the "Kentucky Power Transaction"). OnSeptember 29, 2022 , the parties entered into an amendment to the acquisition agreement, providing a path towards closing. Among other things, the amendment reduces the purchase price by$200 million to approximately$2.646 billion , including the assumption of approximately$1.221 billion in debt. The Kentucky Power Transaction is currently expected to close inJanuary 2023 . Closing remains subject to the satisfaction or waiver of certain conditions precedent, including approval of the Kentucky Power Transaction by theU.S. Federal Energy Regulatory Commission . Upon closing, the Kentucky Power Transaction will add to the Company's regulated footprint in theU.S. and is expected to offer the opportunity to leverage its operational expertise and deliver benefits to the customers and communities of easternKentucky . - Inaugural Asset Recycling Transaction — On
October 3, 2022 , the Company announced that it entered into an agreement to sell 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 consists 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 a 175 MW operating wind facility inCanada . Total cash proceeds from this asset recycling transaction are expected to be approximatelyUS$278 million for theU.S. wind facilities and approximatelyC$107 million for the Canadian wind facility, subject to customary closing adjustments. Through its ability to develop, manage construction and perform asset management services, upon closing AQN will have added incremental shareholder value from these four wind projects. - Release of 2022 ESG Report — Subsequent to the quarter, on
November 7, 2022 , the Company released its 2022 ESG Report, which details AQN's progress with respect to environmental, social and governance matters. Highlights of this year's report include an enhanced Diversity, Equity and Inclusion section showcasing AQN's accomplishments in this area, as well as enhanced data-driven content with the inclusion of new key performance indicators.
- Updated 2022 Adjusted Net Earnings Per Common Share Estimate – In light of challenging macroeconomic conditions (including higher interest rates and inflation), delays in the construction and completion of certain of the Company's renewable energy projects, and anticipated delays in connection with certain rate decisions, among other factors, the Company is updating its previously-disclosed Adjusted Net Earnings per common share estimate for the 2022 fiscal year from a range of
$0.72-$0.77 to a range of$0.66-$0.69 . This revised estimate is based on, and should be read in conjunction with, the assumptions set out under "Outlook – Updated 2022 Adjusted Net Earnings Per Common Share Estimate" and "Caution Concerning Forward-Looking Statements and Forward-Looking Information" in AQN's Management Discussion & Analysis for the three and nine months endedSeptember 30, 2022 (the "Interim MD&A"), which will be available on SEDAR, EDGAR and the Company's web site. Please also refer to "Caution Regarding Forward-Looking Information" and "Non-GAAP Measures" below. - Update on Longer-Term Targets – Given the challenging macroeconomic environment, which is expected to continue into 2023, the Company is evaluating its longer-term targets and financial expectations. The Company intends to provide further details at its upcoming Investor and Analyst Day, expected to be held in early 2023.
AQN's unaudited interim consolidated financial statements for the three and nine months ended
AQN will hold an earnings conference call at
Date: | ||
Time: | ||
Conference Call: | Toll Free Dial-In Number | 1-800-806-5484 |
Toll Dial-In Number | (416) 641-6104 | |
Event Passcode | 8338665# | |
Webcast: | https://edge.media-server.com/mmc/p/9wsn4dfd | |
Presentation also available at: www.algonquinpowerandutilities.com |
AQN is committed to delivering growth and the pursuit of operational excellence in a sustainable manner through an 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 and value enhancing recycling of assets.
AQN's common shares, preferred shares, Series A, and preferred shares, Series D are listed on the
Visit AQN at www.algonquinpowerandutilities.com and follow us on Twitter @AQN_Utilities.
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
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 Interim MD&A, which section is incorporated by reference into this news release, and a reconciliation to the most directly comparable
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 | |||
(all dollar amounts in $ millions) | 2022 | 2021 | |
Net earnings (loss) attributable to shareholders | $ (195.2) | $ (27.9) | |
Add (deduct): | |||
Net earnings attributable to the non-controlling interest, exclusive of HLBV | 5.2 | 4.5 | |
Income tax recovery | (19.5) | (19.4) | |
Interest expense | 75.0 | 51.7 | |
Other net losses2 | 5.9 | 0.9 | |
Pension and post-employment non-service costs | 1.5 | 3.9 | |
Change in value of investments carried at fair value1 | 300.4 | 139.1 | |
Loss on derivative financial instruments | 0.4 | 1.8 | |
Realized loss on energy derivative contracts | (0.8) | (0.5) | |
Loss (gain) on foreign exchange | (5.0) | 1.3 | |
Depreciation and amortization | 108.2 | 96.6 | |
Adjusted EBITDA | $ 276.1 | $ 252.0 |
1 | See Note 6 in the unaudited interim consolidated financial statements. |
2 | See Note 16 in the unaudited interim consolidated financial statements. |
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 | |||
(all dollar amounts in $ millions except per share information) | 2022 | 2021 | |
Net earnings (loss) attributable to shareholders | $ (195.2) | $ (27.9) | |
Add (deduct): | |||
Loss on derivative financial instruments | 0.4 | 1.8 | |
Realized (gain) loss on energy derivative contracts | (0.8) | (0.5) | |
Other net losses2 | 5.9 | 0.9 | |
Loss (gain) on foreign exchange | (5.0) | 1.3 | |
Change in value of investments carried at fair value1 | 300.4 | 139.1 | |
Adjustment for taxes related to above | (32.2) | (17.1) | |
Adjusted Net Earnings | $ 73.5 | $ 97.6 | |
Adjusted Net Earnings per common share | $ 0.11 | $ 0.15 |
1 | See Note 6 in the unaudited interim consolidated financial statements. |
2 | See Note 16 in the unaudited interim consolidated financial statements. |
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 | |||
(all dollar amounts in $ millions) | 2022 | 2021 | |
Cash provided by operating activities | $ 102.9 | $ 174.7 | |
Add (deduct): | |||
Changes in non-cash operating items | 95.7 | (6.2) | |
Acquisition-related costs | 6.9 | 1.7 | |
Adjusted Funds from Operations | $ 205.5 | $ 170.2 |
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