Algonquin Power & Utilities Corp. Announces 2020 First Quarter Financial Results

OAKVILLE, ON, May 7, 2020 /PRNewswire/ - Algonquin Power & Utilities Corp. (TSX/NYSE: AQN) ("APUC" or the "Company") today announced financial results for the first quarter ended March 31, 2020. All amounts are shown in United States dollars ("U.S. $" or "$"), unless otherwise noted.

"APUC's strong and resilient business model allowed the Company to continue growing in the first quarter of 2020 while navigating through what was a challenging weather environment," said Ian Robertson, Chief Executive Officer of APUC. "We believe APUC is well positioned to deal with the impact COVID-19 may have on our business in 2020. Further, our long term growth prospects continue to provide our Board of Directors with the confidence to approve a 10% increase in APUC's annual dividend this quarter. We also are able to reaffirm that our long term capital plan remains unchanged as we move forward with over $9.2 billion of investment opportunities through 2024."

Q1 2020 Financial Highlights

    --  Revenue of $464.9 million, a decrease of 3%;
    --  Adjusted EBITDA(1) of $242.2 million, an increase of 5%;
    --  Adjusted Net Earnings(1) of $103.3 million, an increase of 10%; and,
    --  Adjusted Net Earnings(1) per share of $0.19, no change, in each case on
        a year-over-year basis.

Key Financial Information


         All dollar amounts in U.S.
          $ millions except per
          share information                 Q1 2020 Q1 2019  Variance

    ---


       
              Revenue                    464.9    477.2       (3)%

    ---

                   Net earnings (loss)
                    attributable to
                    shareholders             (63.8)    86.4     (174)%

    ---

                                Per share    (0.13)    0.17     (176)%

    ---

                   Adjusted Net Earnings(1)   103.3     93.8        10%

    ---

                                Per share      0.19     0.19

    ---

                   Adjusted EBITDA(1)         242.2    231.5         5%

    ---

                   Adjusted Funds from
                    Operations(1)             179.3    173.5         3%

    ---

                   Dividend per share        0.1410   0.1282        10%

    ---




              1.                            Please refer to Non-GAAP
                                              Financial Measures and Use
                                              of Non-GAAP Financial
                                              Measures at the end of this
                                              document for further
                                              details.

APUC Business Highlights

    --  Increase in common share dividend - Consistent with APUC's strategy of
        delivering total shareholder return comprised of an attractive current
        dividend yield and capital appreciation, on May 7, 2020, APUC's Board of
        Directors approved a 10% dividend increase from a total annual dividend
        of $0.5640 per common share to a total annual dividend of $0.6204 per
        common share, to be paid quarterly at a rate of $0.1551 per common
        share, up from $0.1410 per common share.
    --  Long term capital investment program reaffirmed - APUC reaffirmed that
        notwithstanding the issues arising from COVID-19 in 2020, APUC's long
        term growth prospects remain unchanged.  Over the long term, the Company
        remains well-positioned to enhance shareholder value through the
        execution of its capital plan as well as the balance and strength of a
        diversified portfolio across the Regulated Services Group and the
        Renewable Energy Group. The Company continues to maintain its
        previously-disclosed expectations regarding its approximately $9.2
        billion development pipeline consisting of approximately $6.7 billion of
        investments in its Regulated Services Group and approximately $2.5
        billion of investments in its Renewable Energy Group through to the end
        of 2024.

Regulated Services Group Highlights

    --  Issuance of C$200 million of senior unsecured debentures - On February
        14, 2020, Liberty Utilities (Canada) LP, the holding company of the New
        Brunswick Gas System, established its Canadian bond platform to finance
        the New Brunswick Gas System with the issuance of C$200.0 million of
        senior unsecured debentures bearing interest at 3.315% and a maturity
        date of February 14, 2050.  The Canadian bond platform can be used for
        future debt issuances to accommodate future regulated utility growth in
        Canada.  The debentures received a rating of BBB from DBRS.

Company Response to COVID-19 Pandemic

    --  Positioned health and safety at the forefront - APUC holds the health,
        safety and well-being of its employees, customers and the communities in
        which it operates as a top priority. Due to the COVID-19 pandemic, the
        Company began restricting business travel, implemented "work from home"
        policies where possible, adopted physical distancing requirements
        between employees, customers, and other precautions intended to protect
        the health and safety of the Company's employees and customers.


    --  Uninterrupted utility operations maintained - As an operator of
        electric, water and gas utility systems and a generator of electricity,
        the Company provides essential services to communities throughout North
        America.  APUC has ensured that these utility services have continued
        safely and uninterrupted since the onset of the public health measures
        taken to address the COVID-19 pandemic.


    --  Additional liquidity obtained - Given the uncertainty around the length
        and extent of public health measures to address the COVID-19 pandemic
        and uncertainty around the extent of the impact this could have on
        capital markets, APUC and its subsidiaries secured an additional $1.6
        billion of liquidity as an additional margin of safety intended to
        ensure the Company can continue to move forward with its updated 2020
        capital expenditure plan and committed acquisitions independent of the
        state of the capital markets.


    --  Supported local communities - APUC has temporarily suspended the
        disconnection of customer utility services for non-payment, temporarily
        waived late payment charges, and temporarily suspended collection of
        overdue accounts, across all of its utility service territories. The
        Company also announced a $500,000 donation across its operating
        territories during the COVID-19 pandemic to local community support
        organizations such as foodbanks, and is also donating personal
        protective equipment to support front-line workers.


    --  Updated 2020 Outlook - In light of the unfavourable weather variance
        experienced during Q1 2020, and considering that it is not known whether
        cost containment strategies will be sufficient to mitigate both the
        unfavourable weather impact of the first quarter and the impact of
        COVID-19 in the balance of 2020, APUC is updating its previously-issued
        Adjusted Net Earnings per share guidance for the 2020 fiscal year from
        $0.68 - $0.70 to $0.65 - $0.70.  The revised guidance is based on, and
        should be read in conjunction with, the assumptions set out under
        "Outlook - Updated 2020 Adjusted Net Earnings Per Share Guidance" and
        "Forward-Looking Statements and Forward-Looking Information" in APUC's
        Management Discussion & Analysis for the three months ended March 31,
        2020, which will be available on SEDAR and EDGAR. Please also refer to
        "Caution Regarding Forward-Looking Information" and "Non-GAAP Financial
        Measures and Use of Non-GAAP Financial Measures" at the end of this
        document.
    --  Updated 2020 capital expenditure estimates - APUC also updated its
        capital expenditure estimates for the 2020 fiscal year.  The Company
        expects to defer between $100.0 million to $300.0 million of capital
        expenditures originally planned for 2020 to 2021.  Aggregate 2020
        capital expenditures for the Company are now expected to be in the range
        of $1.30 billion to $1.75 billion which is revised from the Company's
        previous estimate of $1.60 billion to $1.85 billion.  The deferral of up
        to $75 million of capital expenditures in the Regulated Services Group
        is targeted to areas that are not anticipated to change expected
        earnings for the group in 2020.  The deferral of capital expenditures in
        the Renewable Energy Group is not expected to change the current
        targeted in service dates for renewable energy projects currently under
        construction.  The Company will continue to monitor the impacts of
        COVID-19 and other factors on its updated 2020 capital expenditure
        estimates.  Please refer to "Caution Regarding Forward-Looking
        Information" at the end of this document.

APUC's supplemental information is available on the web site at www.AlgonquinPowerandUtilities.com and in our corporate filings on SEDAR at www.sedar.com and EDGAR at www.sec.gov.

Earnings Conference Call

APUC will hold an earnings conference call at 10:00 a.m. eastern time on Friday, May 8, 2020 hosted by Chief Executive Officer, Ian Robertson and Chief Financial Officer, David Bronicheski. Also in attendance on the call will be Chris Jarratt, Vice Chair and Arun Banskota, President.


        Date:                           
     Friday, May 8, 2020


        Time:                           
     10:00 a.m. ET


        Conference Call
         Access:                        
     
                Toll Free Canada/US:                                
     1-800-319-4610


                                        
     
                Toronto local:                                      
     416-915-3239


                                                       Please ask to join the Algonquin Power & Utilities
                                                        Corp. conference call


        Presentation                                                  http://services.choruscall.ca/links/
         Access:                                                       algonquinpower20200508.html

                                          Presentation also available at:
                                           www.algonquinpowerandutilities.com



        Call Replay:                    
     
                Toll Free Canada/US:                                
     1-855-669-9658
                   (available until May
                    22, 2020)



     
     Vancouver local:                
     1-604-674-8052


                                        
     
                Access code:                                                         4357

Phone networks are currently very busy due to the pandemic. It is recommended that you start trying to connect 10 - 15 minutes prior to the scheduled start time. If you have tried all the appropriate numbers provided above several times and still can't get through, consider whether you have another phone on a different phone network that you could try.

About Algonquin Power & Utilities Corp.

APUC is a diversified international generation, transmission and distribution utility with approximately U.S. $11 billion of total assets. Through its two business groups, APUC is committed to providing safe, reliable and cost effective rate-regulated natural gas, water, and electricity generation, transmission and distribution utility services to approximately 805,000 connections in the United States and Canada, and is a global leader in renewable energy through its portfolio of long-term contracted wind, solar and hydroelectric generating facilities representing over 2 GW of installed capacity and more than 1.4 GW of incremental renewable energy capacity under construction.

APUC strives to deliver continuing growth through an expanding global pipeline of renewable energy, electric transmission, and water infrastructure development projects, organic growth within its rate-regulated generation, distribution and transmission businesses, and the pursuit of accretive acquisitions. APUC's common shares, Series A preferred shares, and Series D preferred shares are listed on the Toronto Stock Exchange under the symbols AQN, AQN.PR.A, and AQN.PR.D. APUC's common shares, Series 2018-A subordinated notes and Series 2019-A subordinated notes are listed on the New York Stock Exchange under the symbols AQN, AQNA and AQNB.

Visit APUC 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 of Canada and the respective policies, regulations and rules under such laws and ''forward-looking statements'' within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 (collectively, ''forward-looking statements"). The words "will", "expects", "intends" and similar expressions are often intended to identify forward-looking statements, although not all forward-looking statements contain these identifying words. Specific forward-looking statements in this news release include, but are not limited to: expectations with respect to the timing and amounts of APUC's growth plans, earnings, cash flow and dividend amounts; expectations regarding APUC's liquidity position; expectations regarding APUC's Adjusted Net Earnings per share for the 2020 fiscal year; and expectations and plans with respect to current and planned capital projects and expenditures. These statements are based on factors or assumptions that were applied in drawing a conclusion or making a forecast or projection, including assumptions based on historical trends, current conditions and expected future developments. Since forward-looking statements relate to future events and conditions, by their very nature they require making assumptions and involve inherent risks and uncertainties. APUC cautions that although it is believed that the assumptions are reasonable in the circumstances, these risks and uncertainties give rise to the possibility that actual results may differ materially from the expectations set out in the forward-looking statements. Material risk factors and assumptions include those set out in APUC's most recent annual and interim Management Discussion & Analysis and Annual Information Form. Given these risks, undue reliance should not be placed on these forward-looking statements, which apply only as of their dates. Other than as specifically required by law, APUC undertakes no obligation to update any forward-looking statements to reflect new information, subsequent or otherwise.

Non-GAAP Financial Measures and Use of Non-GAAP Financial Measures

The terms "Adjusted Net Earnings", "Adjusted EBITDA", "Adjusted Funds from Operations" and "Net Utility Sales" are used in this press release. The terms "Adjusted Net Earnings", "Adjusted EBITDA", "Adjusted Funds from Operations" and "Net Utility Sales" are not recognized measures under U.S. GAAP. There is no standardized measure of "Adjusted Net Earnings", "Adjusted EBITDA", "Adjusted Funds from Operations" and "Net Utility Sales"; consequently, APUC's method of calculating these measures may differ from methods used by other companies and therefore may not be comparable to similar measures presented by other companies. A calculation and analysis of "Adjusted Net Earnings", "Adjusted EBITDA", "Adjusted Funds from Operations" and "Net Utility Sales", including a reconciliation to the U.S. GAAP equivalent, where applicable, can be found in APUC's Management Discussion & Analysis for the three months ended March 31, 2020.

Adjusted EBITDA

Adjusted EBITDA is a non-GAAP measure used by many investors to compare companies on the basis of ability to generate cash from operations. APUC uses these calculations to monitor the amount of cash generated by APUC as compared to the amount of dividends paid by APUC. APUC uses Adjusted EBITDA to assess the operating performance of APUC without the effects of (as applicable): depreciation and amortization expense, income tax expense or recoveries, acquisition costs, litigation expenses, interest expense, gain or loss on derivative financial instruments, write down of intangibles and property, plant and equipment, earnings attributable to non-controlling interests, non-service pension and post-employment costs, cost related to tax equity financing, gain or loss on foreign exchange, earnings or loss from discontinued operations, changes in value of investments carried at fair value, and other typically non-recurring items. APUC adjusts for these factors as they may be non-cash, unusual in nature and are not factors used by management for evaluating the operating performance of the Company. APUC believes that presentation of this measure will enhance an investor's understanding of APUC's operating performance. Adjusted EBITDA is not intended to be representative of cash provided by operating activities or results of operations determined in accordance with U.S. GAAP, and can be impacted positively or negatively by these items.

Adjusted Net Earnings

Adjusted Net Earnings is a non-GAAP measure used by many investors to compare net earnings from operations without the effects of certain volatile primarily non-cash items that generally have no current economic impact or items such as acquisition expenses or litigation expenses that are viewed as not directly related to a company's operating performance. APUC uses Adjusted Net Earnings to assess its performance without the effects of (as applicable): gains or losses on foreign exchange, foreign exchange forward contracts, interest rate swaps, acquisition costs, one-time costs of arranging tax equity financing, litigation expenses and write down of intangibles and property, plant and equipment, earnings or loss from discontinued operations, unrealized mark-to-market revaluation impacts (other than those realized in connection with the sales of development assets), changes in value of investments carried at fair value, and other typically non-recurring items as these are not reflective of the performance of the underlying business of APUC. The Non-cash accounting charge related to the revaluation of U.S. deferred income tax assets and liabilities as a result of implementation of the effects of the Tax Cuts and Jobs Act is adjusted as it is also considered a non-recurring item not reflective of the performance of the underlying business of APUC. APUC believes that analysis and presentation of net earnings or loss on this basis will enhance an investor's understanding of the operating performance of its businesses. Adjusted Net Earnings is not intended to be representative of net earnings or loss determined in accordance with U.S. GAAP, and can be impacted positively or negatively by these items.

Adjusted Funds from Operations

Adjusted Funds from Operations is a non-GAAP measure used by investors to compare cash flows from operating activities without the effects of certain volatile items that generally have no current economic impact or items such as acquisition expenses that are viewed as not directly related to a company's operating performance. APUC uses Adjusted Funds from Operations to assess its performance without the effects of (as applicable): changes in working capital balances, acquisition expenses, litigation expenses, cash provided by or used in discontinued operations and other typically non-recurring items affecting cash from operations as these are not reflective of the long-term performance of the underlying businesses of APUC. APUC believes that analysis and presentation of funds from operations on this basis will enhance an investor's understanding of the operating performance of its businesses. Adjusted Funds from Operations is not intended to be representative of cash flows from operating activities as determined in accordance with U.S. GAAP, and can be impacted positively or negatively by these items.

Net Utility Sales

Net Utility Sales is a non-GAAP measure used by investors to identify utility revenue after commodity costs, either natural gas or electricity, where these commodity costs are generally included as a pass through in rates to its utility customers. APUC uses Net Utility Sales to assess its utility revenues without the effects of fluctuating commodity costs as such costs are predominantly passed through and paid for by utility customers. APUC believes that analysis and presentation of Net Utility Sales on this basis will enhance an investor's understanding of the revenue generation of its utility businesses. It is not intended to be representative of revenue as determined in accordance with U.S. GAAP.

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 APUC. Investors are cautioned that this measure should not be construed as an alternative to U.S. GAAP consolidated net earnings.


                                                           Three Months Ended
                                                    March 31


                     (all dollar amounts
                      in $ millions)       2020                        2019

    ===

        Net earnings (loss)
         attributable to
         shareholders                           $
         
                (63.8)           $
     86.4


        Add (deduct):


        Net earnings
         attributable to
         the non-
         controlling
         interest,
         exclusive of
         HLBV(1)                            4.4                                  7.6


        Income tax expense
         (recovery)                      (13.7)                                14.8


        Interest expense on
         long-term debt
         and others                        46.2                                 42.6


        Other net losses                    4.3                                  3.8


        Change in value of
         investments
         carried at fair
         value(2)                         190.8                                  5.8


        Loss (gain) on
         derivative
         financial
         instruments                      (0.1)                                 0.2


        Realized loss on
         energy derivative
         contracts                        (0.1)                               (0.2)


        Gain on foreign
         exchange                         (4.7)                               (0.5)


        Depreciation and
         amortization                      78.9                                 71.0


                     Adjusted EBITDA             $
         
                242.2           $
     231.5

    ===


              1               HLBV represents the value of net
                                tax attributes earned during
                                the period primarily from
                                electricity generated by
                                certain U.S. wind power and
                                U.S. solar generation
                                facilities.  HLBV earned in the
                                three months ended March 31,
                                2020 amounted to $19.9 million
                                as compared to $21.1 million
                                during the same period in 2019.



              2               See Note 6 in the unaudited
                                interim consolidated financial
                                statements

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 APUC. Investors are cautioned that this measure should not be construed as an alternative to consolidated net earnings in accordance with U.S. GAAP.

The following table shows the reconciliation of net earnings to Adjusted Net Earnings exclusive of these items:


                                                                                                              Three Months
                                                                                                 Ended March 31



       
                (all dollar amounts in $ millions except per share information)   2020                                2019

    ===


       Net earnings (loss) attributable to shareholders                                    $
             
                (63.8)             $
      86.4



       Add (deduct):



       Loss (gain) on derivative financial instruments                               (0.1)                                       0.2



       Realized loss on energy derivative contracts                                  (0.1)                                     (0.2)



       Other losses                                                                    0.9                                        0.2



       Gain on foreign exchange                                                      (4.7)                                     (0.5)



       Acquisition-related costs                                                                                                 1.9



       Change in value of investments carried at fair value(1)                       190.8                                        5.8



       Other non-recurring adjustments                                                 1.0



       Adjustment for taxes related to above                                        (20.7)

    ---


       
                Adjusted Net Earnings                                                   $
             
                103.3              $
      93.8



       
                Adjusted Net Earnings per share                                          $
             
                0.19              $
      0.19

    ===




              1               See Note 6 in the unaudited
                                interim consolidated financial
                                statements

Reconciliation of Adjusted Funds from Operations to Cash Flows from 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 APUC. Investors are cautioned that this measure should not be construed as an alternative to funds from operations in accordance with U.S GAAP.

The following table shows the reconciliation of funds from operations to Adjusted Funds from Operations exclusive of these items:


                                                         Three Months Ended
                                                   March 31


                     (all dollar amounts
                      in $ millions)      2020                              2019

    ===

        Cash flows from
         operating
         activities                             $
         
                66.9              $
     122.1


        Add (deduct):


        Changes in non-
         cash operating
         items                           109.0                                   45.9


        Production based
         cash contributions
         from non-
         controlling
         interests                         3.4                                    3.6


        Acquisition-
         related costs                                                           1.9

    ---

                     Adjusted Funds from
                      Operations               $
         
                179.3              $
     173.5

    ===

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SOURCE Algonquin Power & Utilities Corp.